One of the world’s largest real estate asset managers has raised more than $300M to buy neighborhood and grocery-anchored shopping centers in the U.S.

Nuveen Real Estate, the real estate arm of TIAA that has about $1.3T assets under management, raised $320M in institutional investor capital for its U.S. Cities Retail Fund.

The open-ended fund, first launched in 2018, targets necessity-based neighborhood retail properties anchored by grocery and daily-need tenants in affluent bedroom communities.

"Institutional capital is increasingly recognizing the resilience of necessity-based retail," Nuveen Senior Director Brian Wallick said in a statement. "We are also seeing an abundance of lender appetite in this space."

In December, the Wisconsin Board of Commissioners of Public Lands approved committing $21.5M into Nuveen’s fund, PERE reported.

Nuveen is benefiting from a larger pool of institutional dollars flooding into the open-air retail sector. Its U.S. Cities Retail Fund manages $8B in assets, according to the press release.

Flexible work schedules and a lack of new shopping center construction have helped push up rents and the price investors are willing to pay for those centers.

In the fourth quarter of 2024, grocery-anchored centers averaged a 3.5% vacancy rate in the U.S., 100 basis points lower than the pandemic peak in the second quarter of 2021, according to JLL. Less than 100K SF of net new grocery-anchored retail space in the U.S. was delivered for the second year in a row.

Annual rents for grocery-anchored centers rose 3.1% year-over-year in Q4, according to JLL, outpacing neighborhood and power centers, which saw rents rise by 2.9%.

Investors bought $7B in grocery-anchored shopping centers last year, a 1.4% increase from a year earlier, paying a record $209 per SF, according to JLL. CBRE predicts that at least $10B in open-air retail centers will trade hands this year, The Wall Street Journal reported.