The Zacks REIT and Equity Trust – Retail industry indicates a positive outlook due to stable demand driven by necessity-based, value-oriented retailers and limited new supply. As of late 2025, the industry’s funds from operations (FFO) per share estimates have risen by nearly 1.1%, reflecting increased investor confidence. Retail REITs, including Simon Property Group (SPG), Regency Centers (REG), and Urban Edge Properties (UE), are well-positioned to benefit from reduced tenant churn and steady cash flow, although challenges such as uneven consumer behavior and inflation remain.
Currently, the retail REIT sector, with a Zacks Industry Rank of #92, has underperformed compared to the broader Finance sector and the S&P 500, declining 2.3% over the past year, while the S&P 500 gained 17.6%. The sector trades at a forward price-to-FFO ratio of 14.91X, significantly lower than the S&P 500’s P/E of 23.20X. Analysts predict sustainable growth in FFO for key players, with Simon Property Group’s consensus estimates for 2025 and 2026 revised upward to $12.68 and $13.02, respectively.
Overall, while retail REITs are navigating economic headwinds, the emphasis on essential services, coupled with tight supply conditions, provides a defensive edge for their portfolios.
