Vacancy rates in retail sectors slightly increased while rental prices decreased during the second quarter
In the ever-evolving landscape of the U.S. retail sector, the second quarter of 2025 has revealed some key trends in retail vacancy rates, leasing activity, and construction. These trends, influenced by store closures and supply constraints, paint a picture of a market that is facing a modest uptick in vacancies but still exhibits tight availability in high-demand areas.
According to a recent report by Colliers, the national retail vacancy rate increased slightly by 10 basis points from Q1 to Q2 2025, reaching 4.3%. Despite this rise, vacancy remains well below the 10-year average, indicating a still relatively tight market overall. This upward trend can be attributed to store closures planned for late 2024 and beyond starting to impact the market.
Leasing activity has softened, with a decline of approximately 5.2% quarter-over-quarter. This is accompanied by negative net absorption of 6.4 million square feet, suggesting that more retail space is becoming vacant than is being leased.
Retail construction remains limited due to high financial costs and supply constraints. About 6 million square feet of retail space were delivered in Q2 2025. In growth markets like Texas, a shortage of first-generation (new, high-quality) retail space persists despite rising vacancies in older or lower-quality properties.
Average asking rents for retail space edged down slightly (~0.4%) to around $25.46 per square foot in Q2 2025. Rent growth is expected to continue slowing as more stores close, but limited supply and low overall availability mean newly vacated spaces tend to be re-leased quickly.
Tenants seeking modern retail space in affluent areas may find limited options due to the age of the existing space, according to the report. Among retail property types, malls maintain the highest vacancy rates (8.5% as of late 2023), whereas general retail properties show much lower vacancy rates (around 2.5%).
The high costs, including financial rates, are hindering retail construction. The decline in average asking rents was not quite 0.4%. Retail space availability is 15 basis points above Q4 2023's low. The Colliers Q2 report indicates that much of the remaining retail space is older, with less than 25% built after 2000.
The decline in rent growth is expected to continue somewhat due to store closures. Vacant retail properties tend to be older or lower quality, creating challenges for modern retailers seeking upgraded, affluent-area locations. Despite these challenges, the retail market remains resilient, with robust absorption of available space where quality meets demand.
- In the realm of AI, recent research is focusing on developing policies to navigate the ethical implications of AI in fashion, particularly concerning fair labor practices and sustainable production methods.
- As the culture of space exploration expands, the future of the cybersecurity industry in space missions is undergoing significant scrutiny, aiming to safeguard sensitive data and ensure secure communications.
- In the finance sector, there's growing interest in the role of AI in health technology, with the potential to revolutionize diagnostics, treatment plans, and personalized healthcare services.
- The TV industry is embracing retail as a new frontier, with brands collaborating on product placements, influencer partnerships, and immersive shopping experiences to engage viewers and drive sales.
- The retail sector, despite facing challenges in vacancy rates, is also exploring opportunities in e-commerce and digital marketing, with AI playing a crucial role in forecasting trends and personalizing customer experiences.
- With AI's advancements in data analysis, the finance industry is mobilizing to better understand and mitigate risks in global markets, aiming to enhance investment strategies and foster growth.
- As AI continues to permeate various industries, from fashion to finance, concerns about data privacy and cybersecurity are rising to the forefront, demanding policy solutions to protect consumers and ensure a secure digital future.
