2025 Retail Real Estate Forecast:
What's Next for Retail Property Markets?
The retail real estate industry is navigating a pivotal moment in 2025, shaped by economic shifts, evolving consumer demands, and e-commerce influences.
Our specialists share their insights into the trends shaping the retail property market, from tenant strategies to consumer behavior adaptation.
- Market Dynamics and Economic Impact
- Evolving Tenant Real Estate Strategies
- Regional Market Opportunities (by Bill Read)
- Consumer Behavior and Retail Adaptation
- Bonus Trends (others’ predictions)
2025
1. Market Dynamics and Economic Impact
By Emil Gullia
The retail real estate landscape continues evolving amid economic pressures and shifting tenant strategies. Suburban retail centers are gaining prominence as population migration and hybrid work models create steady demand. Landlords are responding with mixed-use developments, while retailers leverage smaller-format stores and omnichannel approaches. Despite economic uncertainties, sectors like quick-service restaurants, health and wellness, and discount retail continue driving robust leasing activity[1].
Leading Retail Sectors by Market Share
PREDICTION:
Suburban retail centers will witness a 50% increase in tenant demand compared to urban locations in 2025, driven by population shifts and hybrid work trends.
AI Prediction Check:
This prediction aligns with current trends, though the specific percentage may be optimistic. CBRE’s 2025 outlook notes strong demand for retail in suburban and Sun Belt areas[1].
2025
2. Evolving Tenant Real Estate Strategies
By Joe Strauss
Retailers are adapting their real estate strategies to align with changing consumer behaviors, favoring smaller, more flexible footprints. Quick-service restaurants lead this transformation, emphasizing drive-thru lanes and curbside pickup capabilities. Secondary markets are gaining attention, while sustainability and flexible space solutions become increasingly important in tenant decisions[1][2].
Tenant Strategy Adoption Rates
PREDICTION:
In 2025, quick-service restaurants and health and wellness retailers will drive 40% of new retail leases, focusing on properties with drive-thru capabilities and suburban proximity.
AI Prediction Check:
This prediction is plausible, given the continued strength of these sectors. However, the exact percentage may vary depending on market conditions and regional differences.
2025
3. Regional Market Opportunities
With occupancy rates at all-time highs, recent retailer bankruptcy filings have created one of the best opportunities in years for retailers looking to expand. The retail vacancy rate is at a historically low 4.7% (*Costar-PNC). Retailers’ closings like Party City, Rue 21, and Big Lots are opening opportunities for many landlords to recapture valuable real estate. The Southwest and Southeast have shown to lead the country in releasing former retailers’ boxes like Toys R Us, Stein Mart, and Bed, Bath and Beyond per a January report from PNC Bank. The top merchants backfilling these spaces include Burlington, Crunch Fitness, Painted Tree, TJX concepts including Marshalls, HomeGoods and HomeSense, Ross, Barnes & Noble, Bob’s Discount Furniture, and Hobby Lobby.
Vacancy Rates
PREDICTION:
Despite recent bankruptcies potentially adding 12-15 million square feet to the market, strong backfill demand will keep vacancy rates below 5.5% in these regions.
AI Prediction Check:
This prediction is supported by current data. CBRE’s 2025 outlook confirms that retail remains strong, with low vacancies and growing demand for prime locations [1]. The specific vacancy rate prediction seems reasonable, given the current 4.7% rate and anticipated market dynamics.
2025
4. Regional Market Opportunities
By David Ashford
Consumer preferences for convenience, sustainability, and immersive experiences are reshaping retail spaces. Retailers are investing in technology-driven solutions while adopting eco-friendly designs and flexible formats. Pop-up shops and modular store designs enable quick responses to market trends without requiring long-term commitments.
Retail Real Estate Key Trends
PREDICTION:
Retailers will reduce their average store footprint by 20% in 2025 while doubling their investment in technology and experiential elements, resulting in a 25% increase in sales per square foot.
AI Prediction Check:
This prediction aligns with current trends towards smaller, more efficient retail spaces and increased focus on technology and experiential retail. However, the specific percentages may vary depending on individual retailer strategies and market conditions.
2025
Bonus
During our research we encountered five additional trends from other recent forecasts.
The 2025 retail real estate market demonstrates resilience through innovation and adaptation. Regional markets, particularly in the Southwest and Southeast, show strong backfill activity, while retailers embrace technology and flexibility to meet evolving consumer demands. These trends point to a dynamic industry actively shaping its future success.
5.
The overall commercial real estate outlook for 2025 is largely optimistic, with robust performance in the industrial sector and steady retail growth [24].
6.
Retail vacancies are at or near a 20-year low across most U.S. markets amid a three-year wave of increased demand [22].
7.
The retail sector has been quietly performing well over the past couple of years, with limited new supply during the pandemic leading to repurposing and right-sizing of spaces to fit consumer needs [22].
8.
Emerging trends include a focus on smaller, community-based retail targeted to where people are living, working, and playing, combined with more specialty retail [22].
9.
Sustainability remains a critical focus across all real estate sectors, with rising investments in energy efficiency and renewable power solutions [1].
Citations
Citations:
- [1] https://www.credaily.com/briefs/key-trends-shaping-commercial-real-estate-in-2025/
- [2] https://re-nj.com/real-estate-njs-2025-market-forecast/
- [3] https://www.bankrate.com/real-estate/housing-market-2025/
- [4] https://www.rappaportco.com/rappaport-retail-advisors-predictions-for-2025/
- [5] https://www.weforum.org/stories/2025/01/2025-pivotal-year-market-recovery-commercial-real-estate/
- [6] https://www.buxtonco.com/learn/2025-retail-real-estate-outlook
- [7] https://www.bgsf.com/post/2025-real-estate-forecast-key-opportunities-for-commercial-and-multifamily-properties
- [8] https://www.coastlineequity.net/commercial-real-estate-2025-trends
- [9] https://www.jpmorgan.com/insights/real-estate/commercial-real-estate/commercial-real-estate-trends
- [10] https://www.nuveen.com/global/insights/real-estate/real-estate-outlook-2025?type=us
- [11] https://www.cbre.com/press-releases/investment-recovery-to-gain-momentum-despite-interest-rates-remaining-higher-for-longer
- [12] https://www.newsweek.com/texas-house-prices-forecast-fall-31-cities-2010221
- [13] https://knowledge.uli.org/en/reports/emerging-trends/2025/emerging-trends-in-real-estate-united-states-and-canada-2025
- [14] https://www2.deloitte.com/us/en/insights/industry/financial-services/commercial-real-estate-outlook.html?icid=financial-services-industry-outlooks_click
- [15] https://www.msci.com/www/blog-posts/real-estate-in-focus-2025/05250339676
- [16] https://www.cbre.com/insights/books/us-real-estate-market-outlook-2025
- [17] https://www.forbes.com/sites/jeffsteele/2024/12/26/commercial-real-estate-trends-to-watch-for-in-2025/
- [18] https://www.noradarealestate.com/blog/commercial-real-estate-forecast-next-5-years/
- [19] https://crenex.io/trends-short-term-leasing-market-insights-2025/
- [20] https://www.linkedin.com/pulse/2024-reflecting-retail-market-setting-stage-2025-valdez-johnston-vfipe
- [21] https://ebiconsulting.com/2025-cre-playbook-market-trends-investment-strategies-growth-opportunities/
- [22] https://www.dmagazine.com/commercial-real-estate/2024/11/dallas-named-countrys-no-1-commercial-real-estate-market-for-2025-heres-why/
- [23] https://hbsdealer.com/housing-trends-and-predictions-2025
- [24] https://www.jpmorgan.com/insights/real-estate/commercial-real-estate/commercial-real-estate-trends
- [25] https://www.credaily.com/briefs/key-trends-shaping-commercial-real-estate-in-2025/
