The U.S. retail sector saw its vacancy rate increase in the second quarter. But this sector remains a resilient one, with retailers continuing to open new locations across the country, according to the latest research from Colliers.
In its latest retail report, Colliers said that the national retail vacancy rate rose to 4.3% in the second quarter of this year, up 10 basis points from the first quarter of 2025. But while availability is increasing, it is just 15 basis points above its low point in the fourth quarter of 2023 and remains well below the 10-year average.
What does this mean? That the U.S. retail sector remains a solid performer, even with the threats of tariffs, economic uncertainty and the continued growth of online sales.
Not all retail types, though, are performing equally well. The national vacancy rate for U.S. malls rose to 8.9% as of the end of the second quarter, up 20 basis points from the first quarter of the year. But this rate was only 5.3% for retailers operating in smaller shopping centers. That, too, is an increase from the first quarter of 2025, but only a jump of 20 basis points.
Colliers reported that 47.9 million square feet of retail space was under construction in the second quarter, with 6 million square feet delivered during this quarter. New supply remains limited because of high construction costs and interest rates. This has led to a shortage of first-generation space.
The U.S. retail market recorded 6.4 million square feet of negative absorption in the second quarter, accompanied by a dip in leasing activity of 5.2%. Much of the retail space on the market now is of a lower quality, with less than 25% built after 2000. This leaves limited options for tenants seeking modern retail space.
