After four years of steady tenant demand, the retail sector hit a turning point in the first half of 2025, according to Marcus & Millichap.
Both single- and multi-tenant properties saw more space vacated than leased, resulting in nearly 15 million square feet of negative net absorption. That kind of decline hasn’t been recorded in back-to-back quarters since the pandemic era. Early signs of weaker consumer spending are adding pressure, with July’s inflation-adjusted retail sales slipping slightly, especially in discretionary categories. Combined with softer hiring, lower sentiment, and slowing economic growth, the second half of the year could prove challenging for retailers and property owners, according to Marcus & Millichap.
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