While retail fundamentals remained stable in the third quarter of 2025, persistent space constraints and selective consumer spending continue to define the market. The national vacancy rate remained steady at 4.3%, as recent closures and bankruptcies had a minimal impact on overall conditions. Mall vacancies improved by 30 basis points, while shopping center vacancies were unchanged, underscoring the sector’s resilience. The market posted 4.6 million square feet of positive net absorption, largely stemming from earlier lease executions. Meanwhile, new leasing activity declined 8.6%, a trend driven more by tight supply than weakening demand. Restaurants, coffee shops, and wellness tenants remain key drivers of new leasing, accounting for nearly a fifth of all new activity over the past year.

Construction activity remains historically low, with 50.8 million square feet underway and 7.7 million square feet delivered in the third quarter, primarily consisting of small pads and build-to-suit projects. Elevated financing and construction costs continue to restrain speculative development, keeping supply tight and supporting long-term fundamentals. Over the past decade, more retail space has been demolished than added on speculation, resulting in a leaner, more efficient inventory. Developers are focusing on smaller footprints and mixed-use projects, as more than 90% of leasing in 2025 occurred in spaces under 5,000 square feet.

Average asking rents increased slightly to $25.53 per square foot, a 0.27% quarterly rise, supported by strong occupancy and tight supply. Rent growth remains strongest across Southern and Western metros, where population and income gains drive demand, while legacy supply and elevated costs weigh on performance in high-cost coastal markets. Despite uneven consumer sentiment, steady demand and limited availability continue to underpin rent stability nationwide.

Looking ahead, the 2025 holiday season is poised to deliver 3.5% to 4.0% sales growth, bringing total spending above $1.7 trillion. Nearly 243 million consumers (91%) plan to shop this season, favoring a mix of in-store and omnichannel options. Yet shoppers are becoming more selective — seeking value, experiences, and convenience amid tariff-driven price sensitivity. With speculative supply at record lows and modern space in high demand, retail fundamentals remain well-supported as the market enters the final quarter of the year.

Download the U.S. Retail Market Statistics infographic here: 3Q25 Retail Stats