For the first time in 16 quarters, more retail space was vacated in the first quarter of this year than was occupied, according to JLL.
In its first quarter U.S. retail outlook, JLL reported that net absorption in the country’s retail sector fell to negative 2.7 million square feet in the first three months of 2025.
JLL also reported that announced retail closures from 2024 through early 2025 totaled more than 9,900 locations, with big names such as Party City, Big Lots and JOANN leading the way.
These closures might result in higher leasing activity, with JLL saying that they are returning millions of high-demand square feet back into the market in the second quarter of this year.
Freshly vacated space often gets leased quickly by retailers that are expanding. According to JLL, nearly one-third of the 17,248 new leases signed in the first quarter of the year sat on the market for less than five months. More than half of the new leases were signed within 10 months of the space being listed.
A good example of this can be found in the bankruptcy auction of Party City space. Nearly one-third of Party City’s 695 leases were bought by other retailers. Value stores like Five Below and Dollar Tree led this buying spree.
JLL reported that U.S. retail investment volume in the first quarter grew 13% on a year-over-year basis. Compared to the fourth quarter of 2024, though, retail investment volume dropped 7%.
Despite challenges, the U.S. retail market remains resilient. JLL reported that the sector’s vacancy rate stood at 4.1% in the first quarter of the year, while average market rent hit $25.51 a square foot.
A total of 44.7 million square feet of new retail space was under construction as of the end of the first quarter.
