Atlas Real Estate Advisors / June 1, 2025
New construction projects are being delayed due to higher interest rates and rising material costs, and many have been put on hold altogether. The limited new supply has created steady demand for second- and third-generation retail space for lease in high-visibility, high-traffic locations. Reports indicate that the average time to lease has steadily decreased and that vacancy rates across the U.S. are at or near a 20-year low. As a result of the increased competition for existing spaces, there is upward pressure on asking rents.
Notable trends:
Landlords with expiring leases should re-evaluate rates before marketing their spaces to ensure they have adjusted accordingly and are not missing out on potential income.
Although the retail market remains fundamentally strong, we have seen several national and regional retailers close their doors in recent months. These closures are not always a sign of market weakness. In this case, they are frequently the result of shifting strategies. Today’s retailers are factoring in their e-commerce operations and seeking opportunities to reduce their physical footprint—and overhead costs.
With advance planning, landlords of these spaces can capitalize on an opportunity to reposition and improve the property. Average store sizes for new leases are down by over 15% compared to five years ago, and reconfiguring larger spaces into smaller units suited for multi-tenant use and repositioning the property can:
With the right approach, one vacancy can transform into multiple productive, income-generating spaces.
To thrive in today’s market, Atlas recommends that commercial property owners:
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