Much of retail’s resilience in 2020 owed to grocery-anchored shopping centers

The COVID-19 pandemic has had a disproportionate effect on the retail sector during the past year, shuttering brick-and-mortar stores while accelerating online shopping trends to unprecedented levels.

While retail overall saw weaker fundamentals and performance in 2020, one segment of the sector that fared relatively well were grocery-anchored shopping centers.

Abby Rosenbaum, a director in the retail-focused real estate research group at Barings, told IREI in a video interview that declining absorption has caused rent softening, but not to the extent that was expected. Notably, rent and demand declines have largely come from non-anchored tenants and, in fact, the anchored tenants supported many of these centers and drove much of the demand in the third quarter of 2020.

During downturns or periods of economic distress, consumers tend to pull back on items such as clothing or other non-essential goods, says Rosenbaum. They instead focus on the daily necessities.