Retail Is Back (It Never Really Left)

For much of the past decade, the dominant narrative around retail real estate was one of inevitable decline. E-commerce would swallow physical stores. Department stores were facing existential pressure. At the RECM 2026 conference, a panel of retail real estate investors made a compelling case that most of that narrative was simply wrong — and that the capital markets are now catching up to what the data has shown all along.

The panel featured Kevin McCrain, CEO of GGP, and Martha Kelley, a managing director at Bain Capital Real Estate. Moderated by Sher Hafeez, senior managing director of Investment Banking at JLL, their conversation covered the mispricing of retail assets, the enduring logic of omnichannel strategies, tenant relationships, and artificial intelligence.

The Retail Apocalypse Was Oversold

Both panelists traced the opportunity back to a fundamental misreading of the market. When e-commerce penetration began rising magnified by the COVID pandemic, investors treated all retail as structurally impaired and capital exited indiscriminately. Most didn’t consider differences among formats, from malls to grocery-anchored open-air centers, which have performed very differently. The result was a pricing dislocation that created attractive entry points for investors willing to do the work.

Kelley noted that e-commerce growth is leveling off, but the pundits missed the staying power of omnichannel. Consumers do not want to choose between online and in-store; they want both. They want to buy Lululemon pants online and return them at the store on the way to Whole Foods. Retailers, in turn, have discovered that a physical box is often a cheaper customer acquisition tool than pure digital channels.

The COVID-19 pandemic reinforced this point. The retailers that thrived during lockdowns — Target, Walmart, Dick’s Sporting Goods — were omnichannel players with buy-online, pickup-in-store infrastructure built into their physical stores.

Why Grocery-Anchored Open-Air Centers Stand Apart

Not all retail is created equal, and the panelists were clear about where they are deploying capital. Kelley cited real occupancy gains, rent growth, and NOI growth for open-air, grocery-anchored centers coming out of COVID, even as other formats struggled.

Supply pipelines remain muted, and new development remains prohibitive: rents would need to rise 25 to 40 percent before new construction pencils out. Both panelists emphasized that retail is hyper-local on a sub-market by sub-market basis, and good assets exist across the country, not just in coastal markets. Kelley noted that one of Bain's early acquisitions was a three-pack of grocery-anchored centers in Oklahoma City, a market that stood out once they studied the sales performance and local demographics.

Gen Z Goes to the Mall

Gen Z, far from abandoning stores, shops much like every generation before it. What has changed is the social dimension: Gen Z wants to be somewhere worth posting about. They want to identify publicly with a brand or a place.

For landlords, this creates both an opportunity and a challenge. The opportunity is in curating environments that work. As McCrain described it, you curate around fashion, then layer in food and entertainment. The challenge is capturing the economic value of a store visit that ends in an online purchase. A Gen Z shopper might try on a jacket in-store and buy it later on their phone. The retailers know the value of that store, and the landlords do too, but there's currently no reliable way to capture that sale in rent.

Tenant Relationships as Underwriting Edge

Perhaps the most substantive portion of the discussion centered on how retail landlords actually underwrite assets. The answer, both panelists emphasized, is through the depth of their relationships with retailers.

Bain Capital has built a proprietary scoring model rating hundreds of national and regional tenants on business model resilience and growth trajectory. This allows the firm to look past surface-level metrics and assess whether a given tenant mix is positioned to drive foot traffic over the next three to five years. That shapes which assets you pursue. GGP brings similar depth from the other direction: decades of relationships with the largest retail brands in the country, combined with Brookfield's global reach.

Retailers go bankrupt every year, but sophisticated landlords see them coming well in advance and plan to backfill spaces long before a filing hits. The key is focusing on where the puck is going rather than which companies are failing in any given year. More than most asset classes, retail rewards those who know the business from the inside.

What’s Next

Asked to look ahead to 2031, the panelists offered a candid split verdict. On the upside, Kelley expects rent growth to surprise, driven by muted supply, full centers, and productivity gains from AI adoption at the retailer level that may allow landlords to capture a share of gains through higher rents. The capital markets are already responding: Kelley described LP sentiment shifting from “educate me” in 2024 to “retail is one of our highest conviction strategies” by early 2025, with cap rates compressing quickly.

The downside risk, however, is hard to dismiss. Kelley said the industry is probably “vastly underestimating” the impact of AI on the economy. If agentic AI tools displace white-collar workers faster than the economy can absorb, consumer spending and retail foot traffic could come under sustained pressure. McCrain noted the power grid can’t yet support that level of AI displacement, but raised a different concern: agentic shopping, where AI selects what consumers wear and buy. He wondered whether that’s a five- or ten-year shift, and how landlords should be investing now to meet it.

Both panelists acknowledged that the timeline and magnitude of AI’s impact on consumer behavior remains genuinely unknown — and that their strategies will need to evolve to meet a consumption landscape that may look quite different by decade’s end.