Retail Fundamentals Hold Firm Amid Trade and Economic Uncertainty
Retail Fundamentals Softened Slightly in Early 2025
- Vacancy rate ticked up 10 basis points to 4.5%
- Retail absorption slipped negative by 4.7 million square feet in the first quarter of 2025
- Some expansion plans remain, but momentum faces new headwinds
Tariffs and Trade Uncertainty Create New Retail Challenges
- Retailers sourcing heavily from China face the greatest tariff impacts
- Tenant mix will be critical to mitigating tariff-related risks
Long-Term Retail Outlook Remains Positive
- Limited retail construction will curb new supply pressure
- Millennials entering peak earning and spending years support demand
- Retail cap rates in the upper-6% range offer potential for positive leverage
* Through 1Q
Sources: Marcus & Millichap Research Services, CoStar Group, Inc.
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