Subscribe and receive Newmark Retail Thought Leadership updates.
- Insights>
- Market Report Page>
- 1Q25 U.S. Retail Market: Conditions & Trends
1Q25 U.S. Retail Market: Conditions & Trends
May 16, 2025
Newmark presents the first quarter 2025 U.S. Retail Market: Conditions & Trends report.
Contact Us
Subscribe Here
Economic Conditions and Retail Demand Drivers
- Consumer sentiment remains subdued, with concerns around tariff-driven inflation and a weakening job market leaving households uncertain about their financial outlook and expectations.
- However, hard indicators show that wage growth is solid and continues to outpace inflation. Consumers are still dining out and spending on books, sporting goods, hobbies, and personal care services.
- Retailers remain cautious about potential economic slowing due to tariffs, though discount grocers and warehouse clubs are well positioned to capture consumer demand in that scenario.
Capital Markets
- Sale volume in 1Q 2025 rose 13% from 1Q 2024 and 15% from 1Q 2023. Pricing and cap rates held relatively steady overall, with the exception of grocery-anchored retail, where cap rates have compressed over recent quarters. Top-quartile assets also saw cap rate declines, as luxury retail brands continue to invest heavily in high street locations.
- Retail values led all commercial property types in year-over-year growth at 4.6% and also posted the strongest three-month gain, signaling continued pricing momentum.
Leasing Market Fundamentals
- 1Q 2025 marked the first quarter of net negative absorption since 3Q 2020, ending a 17-quarter streak of positive momentum. This trend is expected to persist through year-end, as retailers continue to scale back expansion plans and shutter underperforming locations.
- Even so, market fundamentals remain solid. The availability rate holds at 5.2%, and asking rents posted a modest 0.8% year-over-year increase.
- Retail space continues to perform at a high level, with sales per SF up 5.2% year-over-year and more than 50% above 2019 levels, despite a 1.7% decline in retail space per capita.
Outlook
- Net absorption is expected to remain negative throughout 2025, as retailers take a more conservative approach to expansion and accelerate closures of underperforming stores.
- Asking rents are projected to grow 1.6% in 2025, with a modest acceleration to 1.8% in 2026 under the base case. In a downside scenario, rent growth slows to 0.4% in 2025, dips to -1.0% in 2026, and rebounds to 1.2% by 2027—driven by limited new construction across retail formats.
- Consumers are expected to stay resilient, particularly among top-quartile income households. Middle- and lower-income consumers will likely trade down to stretch spending power.

Related Insights and Reports
2.24.25
Market Report
4Q24 U.S. Retail Market: Trends & Conditions
Newmark presents the fourth quarter 2024 U.S. Retail Market: Conditions & Trends report.
View
11.13.24
Market Report
3Q24 U.S. Retail Market: Conditions & Trends
In the third quarter of 2024, retail fundamentals remained at strong levels, with record-low availability and continued rent growth.
View
12.9.24
Market Report
Holiday Retail Trends 2024
Newmark presents retail trends for the 2024 holiday season.
View
9.30.24
Thought Leadership
The Paris Retail Market & Global Phenomenon of Celebrity Brands
The trend of celebrity and influencer brands is rapidly growing, and while many of these brands start online, they are increasingly establishing physical retail presences, significantly impacting the retail real estate market.
View
7.15.24
Thought Leadership
The Renaissance of the Champs-Élysées
The 2024 Olympic Games have become a pivotal catalyst for the Champs-Élysées, driving extensive retail and urban renewal to invigorate the avenue’s iconic status. Download Newmark’s latest Retail Insight.
View