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Colliers Group: U.S. Retail Vacancy Rises to 4.2% in Q1 Amid Slowing Demand and Rising Closures

Furniture World News Desk on 4/15/2025


The national retail vacancy rate increased to 4.2% in the first quarter of 2025, according to new data from Colliers Research and CoStar Analytics. The figure reflects a 10 basis point rise from the end of 2024. The increase comes amid expectations of more store closures in the near term, though limited new supply, steady demand across categories, and constrained space availability are expected to temper further vacancy increases.

Top U.S. Markets by Vacancy and Inventory
Among the top 10 U.S. metro retail markets by inventory, Boston reported the lowest vacancy rate at 2.5%, followed by New York (3.8%), Atlanta (4.0%), and Philadelphia (4.1%). Los Angeles recorded the highest vacancy rate among major metros at 5.8%, just above Detroit (5.7%) and Houston (5.1%).

Malls vs. Shopping Centers
Malls maintained a vacancy rate of 8.7%, unchanged from the previous quarter. In contrast, shopping centers saw a slight increase to 5.1%, up 20 basis points from Q4 2024.

Retail Construction Activity Slows
Retail construction totaled 44.8 million square feet in Q1, with 7.2 million square feet delivered. Rising financing rates and construction costs have limited new development, particularly in certain locations and store formats.
The top five metro areas for square footage under construction were:

  • Dallas-Fort Worth, TX – 4.7 million SF
  • Houston, TX – 3.5 million SF
  • Phoenix, AZ – 2.5 million SF
  • Austin, TX – 2.2 million SF
  • New York, NY – 1.8 million SF

Net Absorption Turns Negative
The retail market recorded negative net absorption of 3.5 million square feet in Q1 2025. This marked the lowest annual level of demand (excluding 2020) in more than a decade. The decline was driven by limited preleased deliveries and increased store closures.
By property subtype, Q1 net absorption was:

  • Malls: -597,427 SF
  • Shopping Centers: -7.7 million SF
  • All Retail: -3.5 million SF

Rent Growth Slows but Remains Positive
Average asking rents rose 0.27% in Q1 to $25.56 per square foot, with rent growth moderating due to increased availability and slower leasing activity.

  • Malls: $34.42/SF (up 0.38%)
  • Shopping Centers: $25.15/SF (up 0.32%)

Top Markets by Asking Rent
The highest average asking rents per square foot were found in:

  • Honolulu, HI – $52.08
  • Miami, FL – $48.22
  • New York, NY – $47.98
  • San Francisco, CA – $42.89
  • San Jose, CA – $40.59

Other notable markets include Orange County, CA ($39.39), Palm Beach, FL ($36.72), Los Angeles, CA ($36.59), and San Diego, CA ($36.40).

Sources: Colliers Research, CoStar Analytics
Statistics reflect data from 390 U.S. retail markets.

 

 

About  Ben Haverty
Ben Haverty has over 30 years of experience as an executive and entrepreneur in the furniture industry, operating retail stores, home delivery warehouses and regional distribution facilities. As the lead of Colliers Furniture Real Estate Group, Ben works with Colliers integrated real estate services to provide comprehensive solutions for every stage of the furniture industry supply chain, ranging from retail showrooms to home delivery furniture warehouses and wholesale distribution centers. Contact Ben to connect with Colliers’ team of professionals to accelerate your success in the home furnishings industry. For more information, visit www.colliers.com/en/experts/ben-haverty.