The Future of Retail: Insights from Brandon Isner, Head of Research at Newmark

Retail real estate is seeing a fascinating time. While the headlines often focus on e-commerce and retail closures, Brandon Isner, Head of Research at Newmark In a recent conversation, with Shanice Lodge, Marketing Specialist at Hubexo, shared his expertise on the current state of retail, the challenges faced by developers, and the creative adaptations shaping the future of retail.

An Active Retail Market

“Right now, retail real estate is in a very solid situation” Isner observed. He pointed out that availability rates are near record lows across the U.S., with high demand pushing rents upward. “All the top malls and retail real estate in hot areas have never been hotter,” he added, noting that this trend reflects the sector’s resilience.

This tight market isn’t just a result of strong consumer interest but also limited new development. “Construction costs remain restrictively high, and retail rents aren’t at a place where new construction makes financial sense,” Isner explained. Unlike multifamily or office buildings, retail developments lack the vertical scalability that can offset high construction costs. This has led to a slowdown in new retail projects over the past decade.

The Cause of Underdevelopment in Retail

According to Isner, the roots of today’s tight retail market trace back to the Great Financial Crisis and the subsequent rise of e-commerce. “Leading up to 2008, retail deliveries were way above absorption rates,” he said. This created an oversupply narrative, further fueled by the growing dominance of online shopping. “What happened was retail development fell off a cliff and has been very low since then,” Isner added.

However, this lack of new supply has proven advantageous. “Quarterly absorption has consistently outpaced new development, driving down availability rates,” Isner noted. This scarcity has made retail real estate an attractive, secure investment, particularly for private capital. Although it’s been good for property values, high rents, and private capital, the scarcity is to some degree by design. Current rent levels don’t justify new construction, but if more space were to become available, it could help drive rents down.

Creative Adaptations in Retail Spaces

One of the most interesting trends in retail is the repurposing of existing spaces. “Landlords are breaking up large retail spaces, like former Bed Bath & Beyond locations, into smaller, more leasable units,” Isner explained. These smaller spaces are easier to fill, reducing dependency on finding a single large tenant.

The pandemic also accelerated innovative shifts. “Retail was among the first sectors to adapt to the post-internet age reality,” said Isner. Grocery stores quickly implemented curbside pickup, and quick-service restaurants optimized drive-thru operations, reshaping consumer habits almost overnight. “These changes weren’t just survival tactics—they’ve redefined how retail operates,” he emphasized.

Retail Investment Trends and Future Opportunities

Retail investment activity, particularly for multi-tenant centers, has seen a modest but positive uptick. “Retail remains dominated by private capital, but I expect institutional investors and REITs to return as they recognize the sector’s stability,” Isner predicted. This renewed interest reflects confidence in retail’s steadfastness and its ability to generate steady returns.