The U.S. retail sector continues to demonstrate resiliency in 2025. Despite declines in confidence caused by tariff-induced economic uncertainty, consumer fundamentals remain solid, supported by low unemployment, slower-but-steady income growth and solid household finances. In addition, anticipation of future price increases and potential product shortages are incentivizing near-term spending.
Store closures announced in 2024 and early 2025 are beginning to take effect. And, for the first time in 16 quarters, retail net absorption was slightly negative, according to CBRE’s data in March. Much of this decline in net absorption came from power centers and neighborhood centers, as closures from large underperforming department stores added millions of square feet back into the market. The availability rate inched up 10 basis points to 6.6 percent, according to CBRE. Still, it remains comfortably below historical averages.
Construction starts are forecasted to remain low
