Retail Availability Tightens With Strong Absorption

Executive Summary

• Retail space availability tightened further in Q4 2025, with 11.3 million sq. ft. of absorption leading to a 10-basis-point drop in the overall availability rate to 4.8%. 
• Excluding freestanding retail, demand was concentrated in neighborhood, community & centers, which saw nearly 3 million sq. ft. of net absorption. 
• New deliveries fell to 5 million sq. ft., partly due to elevated construction costs and declining construction employment.
• Development activity remained heavily concentrated in Sun Belt markets—particularly Texas, which accounted for nearly 25% of new retail construction in 2025.
• While Sun Belt markets continued to lead in net absorption, demand increased in select Midwest markets like Chicago, which recorded 1.8 million sq. ft. of net absorption in Q4.