High National Retail Absorption in Q4 Persisted Despite Constraints: JLL

Retailers across the U.S. continue to make the best of tight supply and a K-shaped economy, with leasing reaching 2015 levels during the fourth quarter of 2025, according to a new report from JLL.

Positive retail net absorption — a measure of demand calculated by the amount of retail space leased minus the amount vacated — reached 11.9 million square feet across the nation in the fourth quarter, with tenants catering to both the high-end urban shopper and the bargain consumer in suburban and rural areas, according to the brokerage.

The net absorption for the final three months of the year was double that of the third quarter of 2025, which saw a total of 5.2 million square feet leased, JLL’s James Cook told Commercial Observer. However, total leasing volume dropped roughly 25 percent year-over-year to 38.4 million square feet.

“In the first half of the year we saw some negative absorption, more people were moving out of retail space than they were moving in, and that was all the overhang from closure announcements we heard about the prior year,” Cook said. “It’s a real K-shaped economy right now, or barbell retail. We have a lot of high-net-worth individuals that are doing very well, and you have a lot of retailers servicing them. But the biggest part is that we have family shopping on a budget and the middle class.”

Value grocery stores, quick-serve restaurants and discount apparel shops like Ross Dress for Less, T.J. Maxx and Primark are making expansions, with the latter planning to open about 30 stores across the country.

Recently filed bankruptcies for Eddie Bauer and Saks Fifth Avenue are less of an indication of the economic environment than of changing consumer tastes, according to Cook, despite the explanation by Eddie Bauer’s executives that inflation and tariffs have been injuring the company’s bottom line.

“The brands that were hot at — oh my God — the turn of the century, some were able to change with the times, like Abercrombie & Fitch or Chili’s Grill and Bar that can capture the current zeitgeist, but others just aren’t able to do that,” Cook said. “It’s all a cycling.”

Eddie Bauer and Saks Fifth Avenue will start to impact JLL’s data once store closures begin, but locations in the Class A and B malls will get backfilled pretty quickly under current conditions, according to Cook.

One aspect that will hold back retail’s net absorption at some point in the near future is constraints in the construction pipeline. Many new projects have been postponed or faced bottlenecks due to inflation and borrowing costs, which continue to increase.

“Even though rents have gone up, they still haven’t matched the cost of construction, so it makes more economic sense to lease an existing space, but it’s much more difficult to make it pencil out to build something new,” Cook said.

Dollar General is an example of the few retailers managing to build new supply with a system built on simple structures in rural areas where real estate is less expensive.

“Rents are driven by sales, and you can’t increase rents if the retailers are not seeing increased sales, so the problem is that the consumer is really getting hit right now by the aftermath of inflation and a really uncertain economy,” Cook explained. 

Mark Hallum can be reached at mhallum@commercialobserver.com.