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Colliers’ latest single-tenant net lease (STNL) retail report for the second half of 2025 describes a sector that is holding steady but operating under increasingly selective conditions. The research points to an investment landscape shaped by cautious consumer behavior, tariff-related cost pressures, elevated construction pricing and tighter capital market dynamics. Despite these headwinds, fundamental performance indicators were stable, and transaction activity showed measurable growth.
Vacancy in the STNL retail segment remained near 4.3% in the back half of 2025, according to the report. New supply continued to be limited, as high development and financing costs constrained ground-up projects and reduced the flow of newly delivered single-tenant assets. This combination of steady occupancy and supply discipline framed investor decision-making, even as the broader economic environment and cost structure remained challenging.
On the investment sales side, Colliers reported that STNL retail sales volume rose to $6.5 billion in H2 2025, representing a 14% increase compared with the first half of the year. The drugstore category was a notable driver of this activity, with volume in that segment rising 49% over the same period. This pickup in sales occurred even as capital markets conditions remained tight, suggesting that investors continued to transact in sectors and asset profiles that aligned with their risk and income objectives.
Pricing metrics showed a mixed pattern. The median cap rate for STNL retail sales compressed to 6.7% in H2 2025, a decline of 10 basis points from the first half, indicating modest downward movement in yields for traded assets. At the same time, the median price per square foot fell to $294, which was 4.9% lower than in H1 2025. Together, these shifts point to investors sharpening their underwriting and pricing discipline while still competing for assets that meet income and credit criteria.
Colliers executives Anjee Solanki, national director of Retail Services and Practice Groups in the U.S., and Nicole Larson, senior manager of National Retail Research in the U.S., wrote that deal activity increasingly favored smaller-format retail properties. They attributed this trend in part to the appeal of necessity-oriented tenants and to investors’ ongoing emphasis on liquidity, operational efficiency and long-term income durability within the STNL space. This preference reflects the way capital is being allocated within retail net lease, with focus gravitating toward formats and tenant profiles perceived as more resilient.
Overall, the H2 2025 findings point to a STNL retail market where stable vacancy and constrained new supply are intersecting with tighter capital markets and macro cost pressures. While transaction volume and cap rate compression indicate that investor demand remains in place, the shift toward smaller, necessity-based formats suggests that capital is being deployed selectively rather than broadly across the sector.
The post Colliers: Single-Tenant Net Lease Retail Sales and Cap Rates Hold Steady in H2 2025 appeared first on CRE Market Beat.
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