Why Prices For D.C.-Area Retail Properties Are Spiking Right Now

Investors looking to buy shopping centers in the D.C. area are facing fierce competition and soaring costs. 

Nationwide, the retail sector is benefiting from its attractiveness relative to other commercial real estate asset classes, with the office market struggling and the multifamily market oversupplied in many areas. Despite recession fears, consumer spending remains strong, retail vacancy is under 5%, and there’s little new supply in the pipeline. 

The dynamic is causing a flood of investors rushing to buy retail properties.

“There’s more people coming in who haven’t done it in the last decade,” said Sigmund Cos. Managing Principal Wright Sigmund, who has worked in retail leasing and sales in the D.C. region for 20 years. “And it’s noticeable. It’s real. It’s not just a theory.”

The result of all those buyers in the retail sector is that prices are escalating across the country. But the D.C. region is seeing an outsized impact. 

The average price per square foot of retail property nationwide increased by 12.3% between 2024 and 2025, according to Altus Group.

The D.C.-area retail market experienced a 27.2% jump. 

The boost comes after the D.C. market experienced just as drastic a move in the opposite direction the year before, when its price per square foot fell by 30% between 2023 and 2024, according to Altus.

“Once 2025 hit and there was a little bit more stability, everyone was ready to sell,” said CBRE First Vice President Casey Smith, a D.C.-based retail investment sales broker.

“A lot of product hit the market. There's a lot of capital that had been waiting to really deploy. And so overall, the buyer pool went up, sales transactions went up. Pricing certainly increased, just because it got very competitive on deals.”

One of the largest investors has been Federal Realty Investment Trust, a Bethesda-based REIT that has purchased two big D.C.-area properties in the past six months. And executives said on its February earnings call that it plans to be more active in buying retail around the country for the rest of the year. 

This month, Federal Realty acquired Congressional North Shopping Center, a 176K SF property in Rockville, for $72.3M. The Aldi-anchored center that sits on 13 acres was assessed at $51M for 2026, according to Maryland property records. 

In October, it paid $187M for the 480K SF Annapolis Town Center. The Whole Foods-anchored property was previously owned by PGIM Real Estate, and Federal Realty purchased it at a 7.3% cap rate, according to CBRE. It was assessed at $36M, according to Bisnow’s analysis of the individual parcel valuations. 

“This is exactly the kind of opportunity we target: a dominant asset with strong fundamentals, competitive positioning, and the potential to unlock further value under our ownership,” Federal Realty CEO Don Wood said in a release. 

In a signal of strength for the D.C. market, brokers say core and core-plus capital — investors that are looking for low-risk, stabilized assets like grocery-anchored shopping centers — have come back in the game after being on the sidelines for the past few years. 

Meanwhile, the retail sector’s bread-and-butter investment base, the private buyer pool, is broadening. Firms that have traditionally invested in other asset types are shifting into retail, and new groups are forming to seek value in the sector. 

“You have more people who are competing for the same product,” Sigmund said.

CBRE’s Smith said that in the last six to 12 months, the D.C. area has seen more core assets, often grocery-anchored retail properties with stable tenancy, hit the market. And he said more core capital is seeking retail acquisitions.

They are going up against the increased number of private players, creating a fiercely competitive market in the D.C. region. 

“Private capital has been the dominant player for the last few years and continues to be, but they’re now competing with those core groups, and that also drives pricing, because they can be very aggressive, core capital, so that’s also pushing pricing,” Smith said. 

In September, Los Angeles-based US Property Trust purchased a 255K SF retail property in Burke, Virginia. The Safeway-anchored shopping center sold for $127.5M, representing a 6.2% cap rate, according to CBRE. 

That same month, Nuveen purchased a Giant Food-anchored shopping center in Lorton, Virginia, for $53.3M. The property, which has 110K SF of rentable space and a 554-space parking lot, was sold by Bethesda-based Willard Retail, which had picked it up for $50M in 2018. 

Willard Managing Partner Michael Majestic told Bisnow that it is a net seller in this environment. 

The Bethesda-based company sees a strong pool of buyers, especially core and core-plus players that are “interested in retail again,” he said. 

The firm is planning to take a large Northern Virginia center to market this spring and possibly a few more this year. Majestic said that is “a lot” for a small firm like Willard. 

“Now is a good time because there's a deep pool of investors interested in the retail space,” he said. “Back in 2023, that wasn't the case.” 

Sigmund Cos. is deploying the opposite strategy: It is looking to buy. 

Sigmund told Bisnow that grocery-anchored retail has just become too competitive and costly. That is why the firm is instead focused on acquiring “experiential lifestyle” centers with restaurants, fitness studios and other draws for people to spend time there, as well as “experiential power” centers with a mix of big-box anchors and smaller shops. 

“We believe right now you can actually get a really good deal on that product type,” he said.

The firm is looking to do $200M of acquisitions nationwide over the next year. But it is holding off on selling, with the belief that prices are still climbing. 

Smith expects the high-volume, high-price environment to continue this year. 

“We have a lot of clients that are eager to sell just because 2025 proved that there's such a big market and that pricing is getting pretty aggressive with the multiple bidders on every deal,” she said. 

Her mid-Atlantic brokerage team has about $3.3B of properties under contract or on the market right now, which she called “an extremely high number.” She said $2B of that pot is a national grocer portfolio that includes some assets in her home region. 

The team’s listings include a 67K SF ground-floor Giant grocery store in National Landing, the 331K SF Pentagon Centre mall and the 80K SF Quince Orchard Marketplace in Gaithersburg. 

“We've been very busy,” she said. “We've had a lot of deals going.”