Retail Fundamentals Remain Stable Despite Potential Headwinds

Executive Summary

• The overall retail availability rate increased slightly in Q1 to a still relatively low 4.8%, marking the first uptick in five quarters. This rise in availability was mostly due to the growing supply of obsolete space, which has tripled since 2020.
• Net absorption was negative for the first time since Q3 2020, reflecting a cautious start to the year as retailers reconsidered expansion plans amid economic uncertainty.
• Retail development remains near all-time lows, with only 4.5 million sq. ft. delivered in Q1—well below historic norms. Elevated construction costs, labor shortages and tighter lending standards continued to constrain new projects and intensify competition among well-located assets.
• Average asking rent increased by 0.6% quarter-over-quarter and 1.9% year-over-year to $24.68 per sq. ft., driven by strong competition for limited space and high demand for prime locations.
• The effect of tariffs introduced in April may have negative impacts on retail fundamentals and retailer expansion strategies in coming quarters.