In recent years the landscape of retail real estate has undergone dramatic shifts. Shopping centers that once thrived as consumer magnets now face pressure from e-commerce, shifting consumer behavior, and rising operating costs. Yet paradoxically, the transactions at the top end of the market still command staggering values. The highest‐visibility deals today tell us as much about the future of real estate as they do about present demand.
One of the most notable retail real estate deals of 2025 was the sale of Lakewood Center in southern Los Angeles County. This 2 million square foot property—anchored by major retailers and long considered a central retail hub—changed hands for roughly $332 million. That sale ranks among the heftiest single-asset retail deals in the region in recent years, and signals confidence in repositioning large retail assets in strong markets.
This article explores why shopping real estate still commands high dollar values in select markets, how buyers and sellers navigate risk, and what the case of Lakewood Center (and similar deals) reveal about the future of retail property investment.
Why Shopping Real Estate Still Matters
1. Foot traffic and experience remain valuable
Although online retail continues its rise, physical shopping centers still offer something that web pages do not: a curated environment, social experience, and a chance for discovery. Properties with strong location, easy access, and integrated dining, entertainment, and experiential elements still draw customers. Investors see the potential to reposition aging malls or centers by mixing uses, adding lifestyle elements, or converting unused portions to residential or office use.
2. Anchors, tenants, and leasing fundamentals
Retail assets anchored by creditworthy tenants—grocery stores, big box discount chains, or well‐known national brands—carry lower risk. Long lease terms, rent escalations, and stable occupancy help undergird valuations. In a well‐structured deal, the presence of solid anchors can form a backbone for cash flow, making the asset more resilient, even if smaller tenants depart over time.
3. Redevelopment optionality
Many large shopping centers include surplus land, parking, or underused space that can be reimagined. The value lies not just in the present retail business, but in the optionality to convert to mixed use: housing, offices, hotels, or open public spaces. In some markets, zoning and demand allow vertical expansion or infill development, which boosts the upside that buyers are paying for.
4. Flight to quality in a saturated market
As secondary retail properties struggle with vacancy, distressed leases, and capital constraints, high‐quality assets in strong demographic corridors become more attractive. Investors with capital seek “irreplaceable” assets—those for which there is no substitute. That competition drives pricing in top markets, even as risk aversion grows elsewhere.
5. Low supply of trophy retail assets
Because large shopping centers rarely trade, and many are held by long-term owners or institutional holders, supply is limited. When one goes on the market, demand surges. That scarcity of high-quality retail assets contributes to competitive bidding and elevated valuations.
Anatomy of a Record Retail Transaction: Lakewood Center as a Case Study
The property in context
The Lakewood Center mall spans roughly two million square feet and sits on about 150 acres in the greater Los Angeles region. Anchors include Costco, Target, Macy’s, and Home Depot, and its tenancy sits at high levels of occupancy relative to regional peers. The property’s scale, location, and anchor mix make it a visible and strategically valuable asset.
The deal structure and motivations
Macerich, the prior owner, sold the mall to a joint venture comprised of three developer/investor groups for $332 million. The buyer group brings different complementary skills: redevelopment experience, local operational expertise, and capital resources. The acquisition was not merely a retail investment; it is a redevelopment play.
The new owners explicitly signaled their intent to reposition the center as a mixed-use hub: combining retail with housing, open spaces, enhanced pedestrian connectivity, curated dining, and adaptive reuse.
Additionally, the purchase allowed Macerich to streamline its portfolio, reduce exposure in underperforming markets, and focus capital on fewer, more strategic assets.
Valuation metrics and risk considerations
Given the $332 million price tag, the buyers likely considered these key factors:
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Net operating income (NOI): What is the stabilized income from rents minus operating expenses?
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Capitalization rate: In Los Angeles, prime retail cap rates may be low, reflecting investor demand and stable risk.
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Lease roll and tenant stability: How long are the anchor and tenant leases? How many vacancies, and can they be re-leased?
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Redevelopment costs: The capital required to reposition, renovate, or convert portions of the property must be baked into the underwriting.
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Exit scenario and hold period: What is the anticipated resale or refinancing outcome in 5–10 years?
The buyers apparently judged that the upside from redevelopment, densification, and repositioning outweighed the challenges of retail headwinds.
Impacts and market signaling
The Lakewood sale sends several messages to the real estate community:
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Retail real estate—even in a challenging sector—can still attract major capital when backed by vision.
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Mixed use conversion and creative reuse of obsolete retail footprints may define the next frontier in shopping real estate.
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Trophy retail assets in major metros can still command “office-grade” pricing, especially when they offer optionality beyond traditional retail.
Comparative Benchmark: Other Large Deals
While Lakewood gets attention for its size and ambition, other significant retail and shopping center sales merit consideration, as they illustrate comparable market dynamics.
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A portfolio of 10 open-air shopping centers (anchored by Publix) was sold for approximately $395 million. That portfolio deal underscores how investors increasingly bundle assets to diversify risk across geographies and tenant mixes.
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In a more local context, the shopping center near Chicago called Algonquin Commons sold for $100 million, making headlines in that region’s retail real estate market.
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Knollwood Shopping Center in St. Louis Park changed hands for $85.25 million. That deal had its own complications including retenanting costs and financing considerations, but it shows that even mid-sized retail assets continue to move at significant valuations in active markets.
These benchmark transactions, though smaller than Lakewood, highlight commonalities: the presence of stable anchors, solid occupancy, and strategic repositioning potential.
Challenges and Risks in Shopping Real Estate
Despite headline deals, the sector carries substantial headwinds. Savvy investors must navigate the following:
E-commerce and changing consumer habits
The shift to online shopping reduces foot traffic, especially for non-essentials. Retailers are tightening footprints, renegotiating leases, or closing underperforming outlets. Retail landlords must compete to bring in experiential tenants, food hall operators, entertainment concepts, or hybrid retail-office uses.
Inflation, debt, and interest rates
Debt capital is costlier in a rising interest rate environment. If borrowing costs remain elevated, the yield (cash return) demanded by investors increases, compressing valuations. In retail property, the margin for error is tighter, and higher debt service burdens can magnify downside risk.
Obsolescence and vacancies
Older malls or shopping centers may struggle with vacancy and deferred maintenance. Absent capital investment, they can decline quickly. Future buyers must forecast the cost of tenant improvement, re-merchandising, or repurposing.
Zoning, approvals, and entitlement risk
Redevelopment of large retail property into mixed use often requires regulatory approvals, zoning changes, and community buy-in. Delays, opposition, and cost overruns pose real risk to feasibility.
Cash flow volatility
Tenant turnover, lease concessions, and empty storefronts may lead to uneven cash flow. During economic downturns, retail assets may suffer more than other property types.
Market overhang and competition
Given the scarcity of trophy retail assets, competition can push bidders to aggressive pricing. If economic conditions worsen, buyers may overpay and find themselves trapped in underperforming assets.
Outlook: What the Future Holds
If we project forward, three trends seem particularly likely to shape the next decade of shopping real estate:
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Accelerated conversion to mixed use
Retail assets will increasingly incorporate residential, office, hospitality, and public realm elements to diversify income and stabilize demand. -
Smaller scale, boutique, and experiential tenants
Rather than large, traditional anchors, the future may see artisan retail, local food, pop-ups, wellness clusters, and entertainment pods dominate small footprints. -
Data, analytics, and predictive leasing
Sophisticated owners will use consumer data, foot-traffic sensors, and predictive analytics to curate tenant mix, optimize lease terms, and enhance experience. -
Green and sustainable transformation
Redevelopment will likely involve sustainable infrastructure, renewable energy, and environmentally sensitive design. These features will be essential to attract both customers and investors. -
Selective markets remain resilient
The strongest retail real estate will cluster in dense, growing metropolitan areas with favorable demographics, urban infrastructure, and consumer spending power.
Lessons for Buyers, Sellers, and Developers
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Buyers should seek assets with strong fundamentals, optionality, and a roadmap for repositioning, not just passive retail cash flow.
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Sellers of high-performing centers can command premium valuations, especially if they can present redevelopment potential and long lease stability.
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Developers must balance bold vision with disciplined underwriting, accounting for cyclical risk and capital constraints.
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Local governments and planners should understand the value that well-redeveloped retail corridors bring in terms of jobs, tax revenue, placemaking, and urban regeneration.
Conclusion
The story of shopping real estate is one of tension: between decline and reinvention, between retail’s challenges and real estate’s ambition. The $332 million sale of Lakewood Center is not just a headline—it’s a signal that in select markets, property investors still see future value in retail real estate when it is thoughtfully repositioned.