Pricing in retail real estate is beginning to reflect the fundamentals of the market. For much of the past decade, it did not. Demand has strengthened.

Occupancy is historically high. New supply of space remains severely limited. The quality of massively constrained tenancy has improved across open-air retail. At the
same time, new supply has remained limited, constrained by the economics of development and access to capital. Individually, these trends are not new.

Together, they are significant. In prior cycles, this combination of strong demand and high occupancy would have led to new development. Today, it does not. The gap between replacement cost and achievable rents, along with more disciplined capital markets, continues to limit new supply at scale.

As a result, demand is being absorbed within an increasingly constrained inventory of space. That dynamic is showing up in pricing. Not always in headline rent, and not always immediately. But in the underlying economics of the deal. Landlord capital is becoming more disciplined. Tenant investment is increasing. Lease structures are evolving in ways that improve net effective rent. This is how markets rebalance. Retail real estate has already strengthened. The pricing is now following. We have a clear idea of how this shift taking shape, the conditions driving it, and what it means for the next phase of the market.