Similarly, retail sales released by the U.S. Commerce Department’s Census Bureau did not provide clear indicators. After a pullback in April and May, retail spending increased in June by 0.6% and 3.9% year-over-year. Although some economists attributed these results to consumer confidence relating to job growth and the health of the economy, others saw the gain being influenced by the impact of tariffs on prices and consumers’ concern for increasing inflation in the months ahead.

In the Washington, D.C. metropolitan area, CBRE’s REVIVE Regional Vibrancy Index rebounded in May, increasing 0.9% from the previous month, buoyed by improved investor sentiment and visitation scores as hotel occupancy rates rose and Metro ridership increased. According to Ian Anderson, CBRE senior director of research and analysis, “Clearly, we got those huge shocks earlier in the year, and you just started to see things start to settle down, stabilize a little bit.”  According to Anderson, demand for housing remains high, home prices continue to reach record heights and demand for apartments is soaring, indicating that the mass exodus from the region that many feared may not materialize.

From a consumer perspective, the first half of 2025 saw a 1% year-over-year increase in foot traffic. While visits to indoor malls increased nearly 2% year over year, open air centers were the only form to improve over pre-pandemic levels. According to Placer.ai, visits to open air shopping centers were up 0.3% during the first six months of 2025, compared to the first half of 2019.

In light of this uncertainty, certain consumer trends stand out:

• Young Americans age 18 – 24 are cutting back on spending, with online and in-store purchases down 13% year-over-year, according to Circana. This seems to be predominantly due to economic challenges like job scarcity, difficulty meeting student loan repayments and credit card delinquencies. This is causing retailers concern, as Gen Z and Gen A consumers provide the most consistent foot traffic to malls and increasingly are the focus of retailers’ planning for storing, distribution, advertising and Omnichannel strategies. According to Marshal Cohen, Circana’s chief retail analyst, “The beauty of the younger consumer is they give you longevity and they give you loyalty.” 

• Overall dining visits declined year-to-date in the United States, with year-to-year visits to the category down 0.5% for January – May 2025 compared to 2024, per Placer.ai. Washington, D.C. experienced the largest decline, with a -3.6% gap.  Fine dining and coffee saw the strongest overall visit trends, with much of the gains due to expansions rather than greater sales in older locations.  Full-service casual dining saw the largest visit declines, followed by quick service restaurants – possibly leading to the closures announced in the press by Red Lobster, TGI Fridays and Outback Steakhouse, among others. Also, it seems that higher income households are driving the growth in resilient categories, as less affluent households are cutting back.

• Value and value perception gives chains a clear advantage. According to Neil Saunders, Managing Director and Retail Analyst at GlobalData Retail, “Now value has always been important to the customer…And value is not price, price is part of it. But consumers are really asking themselves very deeply: What values does this product add to me in my life? What value does this product have over another product? What value is this retailer adding over another retailer? And one of the ways we’ve seen that in the data is just the time taken to make different purchases and the number of stores people will compare or browse during the purchase process. Both of these metrics have gone up….And it just shows that people are shopping around a lot more and they’re putting in a lot more thinking around what they’re buying, especially for discretionary products.” This is corroborated by work done by Placer.ai, that shows a customer willingness to visit multiple chains to benefit from each store’s signature offering – apparently, the era of one-stop shopping is waning.

• The bifurcation of consumer spending to favor high-low and spurn the middle continues, especially in the apparel space. According to Neil Saunders, “We’re seeing consumers from across the spectrum, across the income spectrum, across demographics shop high low. Sometimes people will be in value, sometimes they’ll be at high end. People that are shopping in luxury sometimes are also shopping on Shein.” 

  At the same time, luxury brands risk decreased sales by spurning aspirational shoppers. The Wall Street Journal cites a Bain study that the luxury industry has lost 50 million customers since 2022, partly because hefty price increases put their goods out of reach for aspirational customers. Boston Consulting Group estimates that nearly 60% of global luxury sales are less than 2,000 euros, leading The Wall Street Journal to posit that luxury brands need a re-emergence of middle-class spending to realize new sales growth.

• A CBRE study indicates that high street retail and suburban retail performance vary depending upon adjacent uses, supply and co-tenancy. Live-work-play districts outperform other formats, providing consumers with convenience and connectivity.  New York City has the highest LWP district rent at $91.40 per square foot, followed by Boston at $47.33 and Washington, D.C. at $46.21.

   

Negative Quarterly Absorption Mirrors Weakening Consumer Confidence

Retailers’ reluctance to sign new leases, coupled with the general lack of available space, led to a second consecutive quarter of negative absorption for U.S. open air retail centers.  According to Cushman & Wakefield, during the Second Quarter, -6.5 million square feet was absorbed in the United States, qualifying the year-to-date performance as the weakest six-month performance since 2020.  Retailers announced 67% more store closures in the first half of 2025 than the first half of 2024, with 5,951 announced store closures v. 4,176 new openings through July 4th.  According to CoStar, the imbalance of openings and closings amounts to roughly 50 million square feet of space that has been vacated without a new tenant in place.  This compares to a 22.8 million square foot deficit during the same period in 2024, according to CoreSight Reearch’s 2024 Review.  While higher than last year, the year-to-date closings fall far short of the 15,000 store closing estimate projected by CoreSight Research at the start of the year.