Why Grocery-Anchored Retail Remains a Hot Property
Global real-estate services firm JLL has published a new report on the literal and figurative grocery landscape. Despite ongoing macroeconomic challenges and shifts in both in-store and online behaviors, the company’s analysts conclude that grocery-anchored retail remains a strong sector.
According to JLL’s "Grocery Report 2025", investments in grocery-anchored retail properties increased from 2023 to 2024. “The ongoing expansion of grocery stores is driving demand for retail space, making grocery-anchored retail properties increasingly attractive to investors. This trend is expected to persist, with REITs and grocery operators likely to play more significant roles in the investment landscape, complementing traditional private capital investors,” the analysts predict.
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The report spotlight grocers who are faring especially well with physical store expansion. JLL notes that ALDI added more than 2.3 million square feet of new space through 105 store openings in 2024. Mergers and acquisitions are also fueling expansion, including M&A moves from Grocery Outlet.
The state of food retailing space is affected by other trends, too, JLL’s team affirms. For example, people are patronizing supermarkets as they continue to eat at home more, given higher prices in the restaurant sector. Reflecting the enhanced integration of physical and digital operations, platforms that integrate Supplemental Nutritional Assistance Program (SNAP) benefits as payment for grocery delivery are boosting grocery accessibility for millions of consumers, supporting retailers and their stores.
Can property supply keep up with demand, though? JLL’s report points to the lack of available retail space that is likely to impact grocers’ long-term growth plans as they aim to widen their footprint but control costs, including rent. According to the findings, grocery-anchored shopping center space available for lease dropped 7.5 million square feet from pandemic-era highs in early 2021.
“While the lack of supply has impacted net absorption, the intense competition among retailers searching for desirable retail space – specifically between expanding grocers – has not waned. Grocery-anchored retail rents continue to rise as demand for grocery-anchored shopping center space persists amidst tightening availabilities, to the benefit of landlords as grocery-anchor retail sustains high levels of rent growth,” the analysts wrote.
In this climate, investments in grocery businesses remain appealing. JLL reports that multi-tenant, grocery-anchored retail transactions totaled $7.0 billion by the end of 2024, up 1.4% from the prior year.
