Retail Market Stable, JLL Finds

The U.S. retail market turned a corner in the third quarter of this year, posting positive net absorption of 4.7 million square feet after two consecutive quarters of decline in the first half of the year, commercial real-estate analyst JLL’s latest report on the sector concludes.

“This turnaround signals market stabilization as the industry works through store closures while benefiting from severely constrained new supply,” writes Keisha Virtue, JLL’s Manager-Retail Research. “With construction at historic lows and demolitions removing obsolete space, expanding retailers face a supply shortage that has been partially alleviated by vacated retail space. The slew of new openings is driven by quick-service restaurants and dollar concepts seeking smaller footprints.”

Here are four key trends from the report:

Net absorption turns positive

The U.S. retail real estate market showed resilience in Q3 2025, achieving positive net absorption of 4.7 million square feet after consecutive quarters of decline totaling minus 14.4 million square feet in the first half of the year. Much of the demand for small spaces is coming from quick-service and fast-casual restaurant chains that continue to expand.

The lack of new supply will remain a challenge

Net deliveries of 7.6 million square feet provided modest new supply, while retail space under construction declined to 50.6 million square feet, showing developers’ continued cautious approach to new projects.

Holiday budgets likely to tell the tale of two consumers

American households are taking a more thoughtful approach to the holidays this year, scaling spending budgets back 10.2% from $1261 to $1133 per person. Consumers are prioritizing gift-giving, with spending remaining virtually unchanged at $580 compared to $582 last year.

Institutional investors are chasing retail assets

The retail investment landscape in year-to-date 2025 demonstrated growth, with transaction volumes reaching $40 billion. Transaction volume for year-to-date 2025 is outpacing the long-term year-to-date average of $33 billion for investment by 20%. The third quarter posted $17 billion in investment which is the largest quarterly investment in retail since the third quarter of 2022.

Click here to register to receive the full JLL report.