Shopping center performance closed out 2025 on a stable footing, even as consumers became more cautious and value-driven. Total visits held steady in the fourth quarter. In contrast, average visits per chain increased by 1.7% year-over-year, indicating improved execution at the operator level through stronger tenant mixes and portfolio optimization. Dwell time decreased by 2 minutes year-over-year, underscoring increasingly efficient, mission-driven trips — consistent with shopping centers’ role as convenience-oriented destinations. This resilience extended into the holiday season, as U.S. retail spending rose 4.2% year-over-year, mainly driven by pricing and promotions. While e-commerce sales continued to outpace overall retail growth, physical stores still accounted for nearly three-quarters of total holiday spending, underscoring the enduring importance of brick-and-mortar stores during peak shopping periods.

Retail fundamentals remained steady in the fourth quarter as the market absorbed the aftershocks of late 2024 and early 2025 bankruptcies. The national vacancy rate held at 4.3% for a third consecutive quarter, while the pace of move-ins surged past 91 million square feet, the highest level since the second quarter of 2022, as move-outs slowed and the pipeline of closures diminished. Vacancy rates continued to trend lower across key formats, with malls at 8.5% and shopping centers at 5.2%, each improving by 10 basis points quarter-over-quarter. The market recorded 11.1 million square feet of positive net absorption despite a 17.3% decline in leasing activity, supported by faster lease-up times averaging under seven months. Smaller-format spaces continued to dominate leasing, although interest in larger footprints also increased.

Construction activity remained muted, reinforcing the retail sector’s supply-constrained environment. Total construction stood at 50.1 million square feet in the fourth quarter, with 8.1 million square feet delivered, while under-construction volume fell to its lowest level since 2021. Elevated construction and financing costs, rising tariffs, and higher capitalization rates continue to limit speculative development, keeping new supply largely confined to build-to-suit projects and pad sites. Much of the limited new development is focused on small pads or build-to-suits for warehouse and big-box users. Outside of Texas, which accounts for nearly one-third of all first-generation space currently available, the shortage of modern retail space remains particularly subtle in high-growth markets.

Average asking rents increased to $26.13 per square foot in the fourth quarter, a modest 0.27% gain, supported by limited new supply and a persistent shortage of quality space. Occupancy costs have essentially returned to historical norms, and current sales levels continue to support prevailing rental rates. Looking ahead, rent growth is expected to track closely with recent historical averages, with spreads on spaces leased for five or more years likely to remain at multi-decade highs through at least 2026. Smaller, well-located spaces in fast-growing metropolitan areas are expected to continue outperforming, while legacy assets in slower-growth markets face ongoing challenges. With new supply constrained and demand uneven but resilient, retail fundamentals remain well supported entering 2026.

Download the U.S. Retail Market Statistics infographic here: 4Q25 Retail Stats