The Resurgence of Brick-and-Mortar Retail: Analyzing Onyx Partners' $947M JCPenney Store Acquisition

The post-pandemic retail real estate market is undergoing a quiet but profound transformation. While e-commerce continues to dominate headlines, brick-and-mortar retail is far from obsolete. Instead, it is evolving—adapting to shifting consumer behavior, leveraging technology, and repositioning itself as a critical component of omnichannel strategies. At the heart of this evolution lies a new wave of investment in physical retail assets, driven by undervalued properties and strategic repositioning. Onyx Partners' $947 million acquisition of 119 J.C. Penney stores in 2025 exemplifies this trend, offering a blueprint for identifying and capitalizing on the sector's untapped potential.

The Post-Pandemic Retail Landscape: Resilience and Repositioning

The retail real estate market has shown remarkable resilience in 2025. Occupancy rates for neighborhood and community centers (NCCs) have reached historic lows of 4.7%, reflecting strong demand and constrained supply. This is partly due to the repurposing of legacy retail spaces—left vacant by bankruptcies like those of Party City and Big Lots—into smaller, more agile formats. Retailers such as TJX (Marshalls, HomeGoods) and Hobby Lobby have thrived in this environment, demonstrating that physical locations remain vital for consumer engagement.

Consumer behavior has also shifted. The pandemic accelerated a preference for convenience, sustainability, and experiential retail. Stores are now expected to serve as distribution hubs for online orders, showrooms for digital brands, or destinations for immersive experiences. The average retail store footprint is projected to shrink by 20% in 2025, while investment in technology and experiential elements is doubling. This shift has created a unique opportunity: properties with prime locations and adaptable designs are being snapped up by tenants who can monetize these trends.

Onyx Partners' J.C. Penney Acquisition: A Case Study in Value Creation

Onyx Partners' purchase of 119 J.C. Penney stores for $947 million in 2025 is a masterclass in identifying undervalued assets. The portfolio, spanning 15.86 million square feet across 34 states, is fully leased under triple-net agreements, meaning J.C. Penney covers all operating costs. This structure provides Onyx with a stable, predictable income stream—$100 million in first-year net revenue—while minimizing operational risk. The cap rate of 10.4% is particularly attractive in a market where yields for stabilized retail assets have historically averaged 6–8%.

The deal also reflects the broader appeal of “repositioned” retail assets. J.C. Penney's bankruptcy in 2020 left its real estate portfolio in a trust, which was systematically liquidated. Onyx's acquisition represents the largest single transaction in this process, underscoring investor confidence in stabilized retail assets with national credit tenants. The portfolio's geographic diversity—spread across Sunbelt markets like Phoenix, Dallas, and Atlanta—further enhances its appeal, as these regions are expected to see the strongest rent growth over the next five years.

Why Now? The Confluence of Market Fundamentals

The timing of Onyx's acquisition is no coincidence. Three macroeconomic factors are converging to make retail real estate an attractive investment:

1. Low Vacancies and Tight Supply: NCC vacancies are near record lows, driven by constrained new construction and the repurposing of older retail stock. Asking rents are rising at the fastest rate in 15 years, with projections of 3.1% annual growth through 2030.
2. Evolving Retail Formats: The rise of smaller-footprint stores, drive-thru capabilities, and experiential retail is creating demand for flexible spaces. Properties that can adapt to these formats—like J.C. Penney's large-format stores—are prime candidates for repositioning.
3. Capital Market Optimism: Institutional investors are increasingly viewing retail real estate as a core asset class. CMBS issuance rebounded to $108 billion in 2024, and lenders are favoring grocery-anchored and service-driven retail over traditional malls.

Strategic Repositioning: The Future of Retail Real Estate

Onyx's acquisition is not just about income generation—it's about long-term value creation. While no specific repositioning plans have been announced, the portfolio's large-format stores (132,000 sq. ft. average) and suburban locations make them ideal for mixed-use development. For example, converting a J.C. Penney site into a retail-residential complex or adding wellness and food-service components could unlock additional value.

This aligns with broader industry trends. Deloitte's 2025 commercial real estate outlook highlights the importance of adaptive reuse and sustainability. Retailers and investors are prioritizing properties that can integrate green technologies, meet building performance standards, and serve multiple functions. As Deloitte notes, 76% of global real estate investors plan to undertake deep energy retrofits in the next 18 months—a trend that could further boost the appeal of repositioned retail assets.

Investment Implications: A Call to Action

For investors, the J.C. Penney deal underscores the importance of looking beyond traditional metrics. While e-commerce continues to reshape retail, physical locations remain indispensable for customer acquisition, brand loyalty, and last-mile logistics. The key is to focus on assets that can adapt to these changes:

• Prime Locations: Sunbelt markets with strong population and income growth (e.g., Phoenix, Nashville) are ideal.
• Flexible Leases: Triple-net or net-leased properties with credit tenants offer stability and high yields.
• Repositioning Potential: Assets with large footprints or suburban sites can be redeveloped into mixed-use or experiential formats.

The post-pandemic recovery is not a return to the past but a pivot to a new paradigm. For investors willing to embrace this shift, retail real estate offers a compelling combination of income, capital appreciation, and strategic flexibility. Onyx Partners' acquisition of J.C. Penney stores is a testament to the sector's resilience—and a signal that the best days for brick-and-mortar retail may still lie ahead.