Retail Real Estate Outlook 2026 (Baird)

Summary

• Non-grocery anchored retail has vacancy of 4.5% compared to 8.7% for enclosed malls.p.3
• Conversion rates are 1.4% for online-only retail, 22.5% for non-grocery anchored retail and 30.0% for small concept and showroom stores.p.6
• ICSC found that 97% of Gen Z respondents prefer shopping in person.p.4
• Omnichannel strategies increase conversion rates by 8% for BOPIS and by more than 20% for curbside pickup.p.7
• The number of experiential retail stores is expected to grow by 14.2% annually through 2032.p.8
• Baird reports 190+ real estate ECM transactions totaling $80 billion in gross deal value.p.11

Key insights

1. Non-grocery anchored retail continues to trade at historically high cap rates despite near-record occupancy.p.5
2. Warby Parker has seen 19%+ sales growth from its brick-and-mortar stores.p.6
3. Wayfair's first showroom store has seen sales growth more than 15% above its online operations.p.4
4. Retailers using omnichannel strategies typically see customer conversion rates that are 5%+ higher.p.7
5. Native digital retailers are pivoting to small format and showroom concept stores.p.6
6. Baird's real estate private capital group completed 50+ transactions totaling $7+ billion.p.11