The U.S. Retail Market Is Turning a Corner: Key Takeaways from JLL’s Latest Report

The American retail landscape is showing signs of stabilization and opportunity, according to JLL’s latest U.S. Retail Market Dynamics report. After a shaky first half of the year, the market is beginning to rebalance in ways that matter for retailers, landlords, and investors.

Market Rebound & Positive Absorption
In Q3 2025, the U.S. retail market recorded +4.7 million square feet of net absorption, rebounding after two quarters of decline. New construction remains historically low, while demolitions continue to remove outdated space. Although store closures are still occurring, the market is tightening overall, creating a competitive environment for retailers seeking high-quality space.

Small-Format Retail Leads Expansion
Quick-service restaurants and dollar concepts continue to dominate new store openings. These brands favor smaller footprints, aligning with broader leasing trends across the industry. Their “small but nimble” approach allows rapid expansion, especially as compact spaces become more available.

Supply Remains Constrained
Construction starts are at very low levels, meaning very little new supply is entering the pipeline. While demolitions help remove obsolete retail space, the limited flow of new development limits choices for expanding tenants. Retailers looking for prime locations are increasingly competing for the same limited inventory.

Demand Is Strong for Value and Service Concepts
Spaces vacated by closures are being leased quickly, with many new deals signed within 5–10 months of listing. Service-based tenants—including fitness, healthcare, personal care, and food operators—are expanding their share of the retail landscape. Consumers continue to gravitate toward experiences and essential services, driving demand for these categories.

Retail Investment Activity Is Rising
Retail investment is gaining momentum again. Early 2025 saw a notable year-over-year increase in investment volume as interest in high-quality assets improved. Investors remain highly selective, favoring well-located neighborhood centers and top-tier retail properties. While strip and open-air centers perform well, traditional malls continue to face challenges.

What’s Next for the Retail Market?
Scarcity will define the next phase of retail real estate. With new construction muted, available quality space will remain limited. Small-format strategies will continue to play a major role, particularly for QSRs and value-focused brands. Service-oriented retail will keep growing its footprint as experience-based shopping becomes a core driver of traffic. Investors can expect strong competition for premium locations, while underperforming assets may require repositioning or redevelopment to remain viable.

Why This Matters
For retailers, the current market favors those with flexible formats and strategic expansion plans. For investors, selective buying in high-quality locations remains key. For landlords, this environment presents an opportunity to enhance, upgrade, and repurpose older assets. Overall, the U.S. retail sector is entering a new era—leaner, more selective, and increasingly shaped by consumer demand for convenience, value, and experience.