While retail fundamentals have softened slightly, persistent space constraints define the market. Net absorption turned negative in the second quarter of 2025, with 6.4 million square feet returned to the market and leasing activity down 5.2%, reflecting increased closures and the lack of high-quality space. As of the end of June, Coresight Research tracked 5,822 store closures nationwide, representing an estimated 123.7 million square feet, further underscoring the shakeout among underperforming locations. Nearly 40% of what’s available is rated 2 Stars or below, and less than a quarter was built after 2000, leaving tenants seeking modern retail space in prime areas with limited options.

The national vacancy rate rose to 4.3% in the second quarter, an increase of 10 basis points from the first quarter. For the first time since 2020, the U.S. retail market entered 2025 with more space listed for lease than the year prior, driven by a substantial uptick in store closures. That trend persisted into the second quarter, as many of the closures announced in late 2024 have now materialized into new available space. Still, demand remains healthy, with many vacant locations expected to be reabsorbed quickly, particularly those in high-traffic trade areas.

Construction activity remains historically low. Just 6 million square feet were delivered in the second quarter, bringing the total space under construction to 47.9 million square feet. Elevated financing and construction costs are limiting new development, especially for standalone retail. Developers face opportunity costs as demand for multifamily, industrial, and mixed-use formats remains strong. Since 2020, just 21 million square feet of newly built retail has been listed for lease, less than 5% of national availability. Much of this is concentrated in high-growth markets, with Texas alone accounting for nearly one-third of all first-generation space currently on the market.

Asking rents dipped slightly to $25.46 per square foot, a modest 0.39% decrease. While recent store closures and softer retail sales are creating some drag on rent growth, the broader market remains well-supported by tight availability and stable demand. Backfill activity remains brisk, with some landlords securing 40% or more rent premiums on re-released space. Since the end of 2019, occupied retail space in the U.S. has grown by just 1.3%, yet retail sales efficiency has surged, with monthly sales per square foot (excluding e-commerce, gas, and auto) reaching a record $24.96 in the first half of 2025 — more than 30% above pre-pandemic levels. This remarkable increase in productivity has helped sustain the overall health of the retail market despite limited space growth.

Download the U.S. Retail Market Statistics infographic here: 2Q25 Retail Stats