Q1-2025: Marketplaces Industry Quarterly Report

Marketplaces Industry Report

Q1-2025

The U.S. Marketplaces Industry experienced a solid start to 2025. Despite a drop in consumer sentiment, spending in Q1 was strong and retail sales saw the highest year-over-year (YoY) growth in over a year. The retail sector experienced the biggest quarterly rise in employment in two years, while food services saw a decline in the number of employees. Due in part to the large share of consumers shopping in stores, operational performance at U.S. marketplaces grew year over year and occupancy rates remained healthy. Scroll through ICSC’s Q1-2025 Report in full, or click to the individual sections using the navigation below.

Quarterly Retail and Food Services Sales: Q1-2025

Retail and Food Services Sales* Performance and Overview**

Non-Store Retailers

Food-and-Beverage Stores

General Merchandise Stores

Food Services and Drinking Places

U.S. Dollars (Millions)

Retail and Food Service Sales

Month-to-Month % Change

January

March

Q1-2025 Overall Sales

$1.58 Trillion

+0.6% Q-o-Q

Health and Personal Care Stores

Source: U.S. Census Bureau

U.S. Shopping Center Performance Benchmark

Source: NCREIF and ICSC Research

Consumer Engagement

Source: Surveys of Consumers, University of Michigan: Consumer Sentiment

Purchase Channels: March 2025 – April 2025

Source: ICSC Research

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CONTENTS

Retail and food services sales (excluding motor vehicles, auto parts and gasoline) totaled $1.58 trillion in the first quarter of 2025. Compared to the previous quarter, Q1-2025 sales for this sector grew 0.6% and increased 4.8% year over year, which is the strongest pace in more than a year.

On a rolling four-quarter basis (Q2-2024 to Q1-2025), base rent at marketplaces across the U.S. increased 4.1% and net operating income (NOI) rose 4.9% over the prior comparable period (Q2-2023 to Q1-2024). Q1-2025 alone saw base rent rise 3.7% year over year and an increase of 5.4% in NOI. All regions across the U.S. saw base rent and NOI grow over the prior 12 months, with the East experiencing the largest gain in base rent and the Midwest seeing NOI jump the most. Shopping center occupancy rates ended Q1-2025 at 91.9%, which is 0.1 percentage points higher than at the same point in 2024. The South experienced the largest rise in occupancy in Q1, while the West saw occupancy decline.

From late March to late April 2025, 89% of consumers made a purchase in a physical store or ordered online for in-store pickup. The share of consumers buying in stores or picking up an online order in store was equally as high among Millennials and Gen X at 89%, which is nearly the same as three months earlier. Baby Boomers, who are the largest share of consumers shopping in stores, followed at 88%. For shopping centers specifically, more Gen Zers visited enclosed malls (68%) than any other cohort. Overall, that group visited malls 1.8 times within the late March-April 30-day period, on average.

Consumer Sentiment

After a general improvement throughout 2024, consumer sentiment progressively declined year-over-year and month-to-month in Q1-2025. By the end of Q1-2025, the sentiment index was 23% lower than the end of Q4-2024 and 28% below the level a year ago. Consumer sentiment has not been this low since late 2022. Reasons for the deterioration include concern about personal finances, the labor market, the stock market, inflation and general economic uncertainty.

Consumer Economic Sentiment

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Q1 Sales by Tenant Category

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Percent Change

Building Materials and Garden Equipment/Supplies Dealers

Index

Index of Consumer Sentiment

Year-over-Year % Change in Consumer Sentiment

Year-over-Year % Change

+4.8% Y-o-Y

$522,157

$524,735

$529,231

The member organization for industry advancement, ICSC promotes and elevates the marketplaces and spaces where people shop, dine, work, play, and gather as foundational and vital ingredients of communities and economies. ICSC produces experiences that create connections and catalyze deals; aggressively advocates to shape public policy; develops high-impact marketing and public relations that influence opinion; provides an enduring platform for professional success; and creates forward-thinking content with actionable insights – all of which drive industry innovation and growth. For more information, please visit www.ICSC.com.

February

% Change

83%

Feel secure with their current job

59%

Have higher credit card debt now than they did three months ago

51%

Believe their financial situation one year from now will be "somewhat better" or "significantly better"

39%

Expect their total monthly spending on goods and services to increase over the next three months

38%

See the state of the economy a year from now as "somewhat better" or "much better"

32%

View their current financial situation compared to a year ago as "somewhat better" or "significantly better"

Shares of U.S. Adults

Source: ICSC Research

Household Debt Balance

At the end of 2024, total household debt balances surpassed $18 trillion, which is $533 billion more than a year earlier and over $3.7 trillion more than Q1-2020. Although the debt balance has continued to climb, so has disposable income, which reached a value of nearly $22 trillion at the end of 2024, bringing the debt-to-income ratio to 82%. Despite the total debt balance reaching its highest level on record, debt balances relative to income are at their lowest point in several years. In 2019, the quarterly debt-to-income ratio averaged 86%, then declined for nearly two years before rising again to a quarterly average of 87% during 2022 when inflation peaked. One notable component of household debt has been credit cards, as they have been one of the main contributors to rising outstanding debt balances over the past several years, increasing $318 billion since the start of the pandemic to $1.2 trillion. Though the rate of increase in credit card balances is slowing, since late 2022, the share of seriously delinquent credit card balances (90+ days late) has gradually increased.

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Clothing and Clothing Accessories Stores

Furniture and Home Furnishings Stores

Sporting Goods, Hobby, Musical Instrument, and Bookstores

Electronics and Appliance Stores

* Seasonally adjusted ** Excluding motor vehicles, auto parts and gasoline

Physical Stores

Share of Consumers

Gen X

Millennials

All Consumers

Baby Boomers

Gen Z

Click-and-Collect

Ship to Self

78%

68%

76%

78%

85%

34%

41%

48%

36%

17%

53%

51%

53%

59%

In Q1-2025, sales for non-store retailers saw the strongest year-over-year growth followed by furniture and home furnishings stores and health and personal care stores. Sporting goods, hobby, musical instruments and bookstores, and electronics and appliance stores were the only categories to experience a YoY decline. Building material, garden equipment and supplies dealers saw sales decline the most from Q4-2024.

Source: New York Fed Consumer Credit Panel/Equifax

Household Debt Balance | Retail and Food Services Sales Performance | U.S. Employment Situation U.S. Shopping Center Performance Benchmark | Consumer Engagement | Consumer Sentiment

Credit Card Balances Continue to Rise

U.S. Employment (in Thousands)*

U.S. Employment Situation

The retail sector added 53,600 jobs in Q1-2025 over the previous quarter. This is the strongest quarterly rise in two years and is due to the January and March increases, which were two of the largest month-to-month gains in a 15-month span. On average, the first quarter had nearly 46,000 more jobs than Q1-2024. The food services sector lost 35,200 jobs in Q1-2025, the first decline in three quarters. Despite this drop, Q1 had an average of nearly 98,000 more food services jobs than Q1-2024. By the end of Q1-2025, retail employment was up 71,900 jobs from its February 2020 level, while the food services sector had 44,800 more employees compared to that pre-pandemic point.

Food Services and Drinking Places

January February March

12,338.00 12,299.10 12,329.80

Retail

January February March

15,573.20 15,569.40 15,591.10

Drinking Places

Retail Food Services and

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January

February

March

Source: Bureau of Labor Statistics

* Seasonally adjusted

Credit Card Debt ($)

Year-over-Year Growth in Credit Card Debt (%)

Percent

U.S. Dollars (Trillions)

Share of Credit Card Balance 90+ Days Delinquent (%)