After several years of positive absorption, single-tenant retail space demand has dwindled in the first half of 2025, according to Marcus & Millichap’s 2025 Single-Tenant Net-Lease Retail Analysis. Store closures and tariff-related price pressures, along with a weakening labor market, have impacted leasing efforts, with vacancy growing roughly 21 million square feet during the six-month interval; however, food-related tenants are playing a large role in maintaining stability in the market.
The first eight months of 2025 demonstrated that core retail sales rose 4.9 percent when compared to the same period in 2024. Popularity with health and personal care tenants, restaurants and bars, as well as apparel retailers, have implicated that single-tenant demand is still on the rise.
Grocery stores, quick-service restaurants (QSRs) and convenience stores seem to be driving that growth. These categories absorbed a combined 11.5 million square feet of retail space, noted Marcus & Millichap. For example, grocery store vacancy has held below 3 percent since the second quarter of 2017, with several chains like Aldi, Publix, Trader Joe’s and Sprouts Farmers Market continuing to expand in several locations across the country.
Meanwhile, the quick-service category has maintained vacancy levels below 2 percent since 2010. As of September, the sector’s vacancy rate stood at 1.3 percent. Similarly, convenient stores hold vacancy levels below 2 percent, with roughly 1.9 million square feet of space absorbed in the previous 12 months.
Although an estimated 6,000 stores closed during the first half of 2025, these leases were simultaneously acquired by other retailers to avoid various construction risks, while also expanding their market shares. For instance, the analysis stated that Ollie’s Bargain Outlet, Tractor Supply and Ocean State Job Lot collectively acquired nearly 100 Big Lots leases over the first six months of 2025, as Burlington, Hobby Lobby and Boot Barn each assumed Joann’s commitments.
Meanwhile, drug stores are experiencing heavy strain, as vacancy rates rise to 4.8 percent — the highest since 2000. Several Rite Aid leases were acquired by a mix of operators including Walgreens, Albertsons, Kroger, Giant Eagle and CVS Pharmacy. Likewise, department stores have struggled as vacancy levels top 6.3 percent; however, average asking rents have increased 6.7 percent in the previous 12 months as off-price retailers like T.J. Maxx, Marshalls, HomeGoods and Ross Dress for Less expand their operations.
Overall, Marcus and Millichap identifies that the single-tenant retail market “continues to be an attractive option for active investors seeking less management-intensive properties,” as consumer spending exceeds expectations.