Grocery-Anchored Retail: The 2026 Outlook

Outlook pieces usually promise more certainty than anyone actually has. This one is deliberately different. Rather than predict where cap rates or consumer spending will sit in twelve months — numbers nobody can honestly know — this issue lays out how we are reading the grocery-anchored retail landscape as 2026 draws toward its close: the forces we believe are shaping the category, the signals we watch quarter to quarter, and the questions we think matter more than any single forecast. It is commentary on conditions, not a prediction of results, and it should be read that way.

The forces shaping the category

Three structural forces continue to define grocery-anchored retail as we see it. None of them are new, but all three have intensified.

• Non-discretionary demand. Food, pharmacy, and everyday services remain among the last household expenses to be cut when budgets tighten. That behavior has repeated across every period of economic stress in living memory, and it is the foundation the category rests on.
• Constrained new supply. New open-air shopping center construction has remained limited for years relative to historical norms, which means well-located existing centers face little new competition for the same trade areas. Scarcity of quality space is a quiet but powerful tailwind for owners of the right centers.
• Grocer investment in physical stores. The largest grocery operators continue to invest in remodeling, price, and the integration of online ordering with in-store pickup — all of which reinforce the physical store as the center of the grocery business rather than a legacy format being wound down.

What we are watching

Conditions change, and honest commentary should name what could move against the category as readily as what supports it. Into year-end, the signals we watch most closely are these.

• Interest rate policy and the cost of capital. Rates influence transaction pricing and refinancing conditions across all of commercial real estate. Our preference for conservative leverage exists precisely because this variable is outside any owner's control.
• Interest rates, cap rate expansion, and acquisition pricing. Higher borrowing costs have put downward pressure on commercial real estate values, but transaction pricing often adjusts more slowly than interest rates. Sellers initially anchor to prior valuations while buyers underwrite to today’s cost of capital. That gap is now narrowing in parts of the market, with higher required yields increasingly reflected in asking prices and negotiated transactions. For an asset with unchanged net operating income, a higher acquisition cap rate means a lower purchase price. A property marketed six months ago may therefore command less today, creating potential opportunities for disciplined buyers with available capital.
• Consumer trade-down behavior. When household budgets tighten, spending shifts toward value-positioned grocers and private label rather than disappearing. Which position an anchor occupies — deep value, quality-value, or conventional mid-tier — matters more in this environment than the category label alone.
• Anchor health at the operator level. Comparable sales trends, remodel programs, and digital investment at the specific grocers anchoring a center tell us more about that center's prospects than any sector-wide statistic.
• Trade-area demographics. Population stability and growth in the Carolinas and the Southeast remain the regional story we underwrite behind, trade area by trade area rather than in aggregate.

The questions that matter more than forecasts

For advisors and investors evaluating this category, we think the useful questions are structural rather than predictive. Does the center draw weekly, non-discretionary traffic? Is the anchor financially healthy and investing in its stores? Is the basis disciplined enough to survive an ordinary downturn rather than requiring a favorable one? Is the operator close enough to the asset to manage it closely?

Those questions can be answered with evidence. Forecasts cannot. That is why our underwriting process is built around the former, and why this series will continue to report conditions and context rather than predictions.

The durable advantages in this category are structural — weekly demand, constrained supply, disciplined basis. They do not depend on any particular forecast being right.

How this shapes our own posture

Nothing in the current environment has changed the principles we underwrite by: necessity-based anchors, disciplined entry basis, conservative leverage, and close regional operations. If anything, an uncertain rate and consumer environment is the condition those principles were designed for. We continue to evaluate opportunities across the Carolinas and the Southeast on those terms, and to pass on far more than we pursue.