Newmark Finds U.S. Retail Rebounds in Q3 With $16.1B in Sales, Low Availability

The retail market enters the fourth quarter of 2025 in a healthy place, but uncertainty abounds as to whether high tariffs and sagging consumer confidence will undermine the sector during the holiday season. 

A new report from Newmark exclusive to the retail sector found that availability remains at a historic low of 5.3 percent, well below the long-term average of 6.6 percent, underscoring a lack of rentable space and the pricing power that owners and operators have over tenants. 

Moreover, after two consecutive negative quarters, demand for retail rebounded in the third quarter, as the 1.1 million square feet of net absorption reversed a recent trend of softening across U.S. markets and exceeded expectations of a leasing downturn, led largely by strong absorption rates in Sun Belt markets like Dallas, Houston and Phoenix. 

Finally, the Newmark report found that the retail investment sales market is surging, with third-quarter sales volume reaching $16.1 billion, an increase of 40 percent from the third quarter of 2024 and the highest quarterly metric in three years. 

“My thesis, which other people might argue with, is the continued resilience of retail,” said Brandon Isner, head of U.S. retail research at Newmark, and author of the report. “It’s a good indicator that a lot of the mass closures are beyond us and there’s a resilience of retail just on a demand basis.”  

Even though store closures in large markets, like those of Party City and Forever 21, are quickly being replaced with new tenants, leasing is not at its historic peaks: Total lease volume for the third quarter of 2025 stood at 31.1 million square feet, roughly 30 percent below the historic metric of 44.5 million square feet, according to Newmark.  

Even so, retail has largely benefited from the demolition of nearly 109 million square feet of obsolete space in the last five years, creating favorable conditions for owners and investors alike to benefit from the pricing power inherent in constricted supply.  

“There’s been very little new construction of retail space since the [Global Financial Crisis],” said Isner, who noted deliveries each year since 2009 have been below 1 percent of total supply across the U.S. “It was the rise of e-commerce that scared people off. There just hasn’t been a lot of new retail built since then, and it has allowed leasing to catch up to new spaces.” 

Case in point: Newmark reported that malls, lifestyle centers, outlets and free-standing retail properties together recorded an occupancy rate increase of 10 basis points in the third quarter of 2025. 

Isner also noted that, in 2025, the public and capital markets understand that stores serve not merely as places to buy goods, but can act as physical displays for brands to market various products and as physical spaces to ship and hold goods across local markets. 

“A lot of people understand that e-commerce isn’t an enemy of physical retail, and in fact the two work together to make each other better,” said Isner. “[E-commerce] is something that, overall, retail isn’t afraid of anymore.” 

The rebound in retail this year was driven by a resurgence in investment sales. The $16.1 billion in retail assets that traded hands in the third quarter was the highest quarterly volume since the third quarter of 2022, and the $45.8 billion of retail investment sales through the first three quarters of 2025 is 29 percent higher than 2024, per Newmark.  

Newmark analysis argued that “with a strong fourth quarter, [2025 investment sales] could challenge 2019, 2021 or 2022 in total annual volume,” and noted that “big-ticket” investment sales have already reached $2.3 billion in 2025, with institutional buyers having acquired 

$1.7 billion worth of retail nine months in, already the highest total for this metric in six years. 

“There’s a lot of new interest where there wasn’t before,” said Isner. “There’s a lot of renewed interest in it.” 

One worrisome trend is consumer confidence and tariffs. Not only has the Trump administration’s tariffs forced many retailers to push costs onto consumers, and forced consumers to dial back spending, but the consumer sentiment index is near an all-time low recorded in April 2022. 

“Retail is always up against soft data versus hard data, and unfortunately this quarter we don’t have advanced retail sales because of the government shutdown,” said Isner. 

“This holiday season will be really pivotal when looking at all that. Until the actual hard data comes out, it’s all a guessing game,” he added. 

Brian Pascus can be reached at bpascus@commercialobserver.com.