Q2-2025: Marketplaces Industry Quarterly Report

Marketplaces Industry Report

Q2-2025

In Q2-2025, the U.S. Marketplaces Industry saw healthy gains for retail and food services sales over Q1 and year over year and mixed results for the labor market. Compared to the previous quarter, the retail sector lost jobs, while food services saw an increase in the number of employees. An early start to the back-to-school shopping season drove consumers to stores, helping to boost operational performance at U.S. marketplaces. Plus, strong retailer demand combined with limited new construction pushed occupancy rates higher. Scroll through ICSC’s Q2-2025 Report in full, or click to the individual sections using the navigation below.

Quarterly Retail and Food Services Sales: Q2-2025

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

April

June

Q2-2025 Overall Sales

$1.59 Trillion

+1.1% 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: June 2025 – July 2025

Source: ICSC Research

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CONTENTS

Retail and food services sales (excluding motor vehicles, auto parts and gasoline) totaled $1.59 trillion in the second quarter of 2025. Compared to the previous quarter, Q2-2025 sales for the sector grew 1.1% and increased 4.7% year over year. These Q2 gains helped propel year-to-date sales in 2025 to $3.17 trillion, 4.8% more than the same period in 2024.

On a rolling four-quarter basis (Q3-2024 to Q2-2025), base rent at marketplaces across the U.S. increased 4.0% and net operating income (NOI) rose 5.4% over the prior comparable period (Q3-2023 to Q2-2024). Q2-2025 alone saw base rent rise 3.1% year over year and an increase of 5.8% in NOI. All regions across the U.S. saw base rent and NOI grow over the prior 12 months, with the South experiencing the largest gain in base rent and NOI. Shopping center occupancy rates ended Q2-2025 at 92.6%, which is 0.6 percentage points (pp.) higher than at the same point in 2024 and 0.7 pp. above Q1-2025. The Midwest experienced the largest rise in occupancy in Q2, while the West saw occupancy decline.

From late June to late July 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 highest among Millennials (92%) and Gen X (91%). The region with the largest share of consumers buying in stores or ordering online for in-store pickup was the West at 91%. For shopping centers specifically, nearly half of consumers visited an enclosed mall. More Gen Zers visited enclosed malls (70%) than any other cohort. Overall, that group visited malls 1.9 times within the late June-July 30-day period, on average.

Consumer Sentiment

In April and May 2025, consumer sentiment dipped to the lowest level since June 2022, continuing a decline that began at the start of the year. Reasons for the further deterioration included general economic uncertainty, declines in the stock market and worry about personal finances. Although sentiment rebounded in June and rose to the highest level in four months, it was still 11% lower than a year ago and 18% below December 2024.

Consumer Economic Sentiment

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Q2 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

+4.7% Y-o-Y

$530,346

$530,093

$533,035

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.

May

% Change

85%

Feel secure with their current job

57%

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

54%

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

37%

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

39%

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

Retail Real Estate Supply

The U.S. retail market recently recorded negative net absorption for the first time since 2020 due to retail bankruptcies and resulting store closures. Despite this, supply conditions remain healthy. Availability remains relatively tight, and the vacancy rate increased only slightly as strong demand for space has resulted in availabilities backfilling at the fastest pace in years. In Q2-2025, ICSC tracked just over 2,300 announced store openings. Competition for space is due in part to a limited amount of new retail development over the past several years; a trend that is likely to continue as retail construction starts to slow, resulting in less space under construction.

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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

80%

69%

78%

84%

86%

37%

49%

53%

34%

19%

56%

50%

56%

55%

62%

In Q2-2025, sales at health and personal care stores saw the strongest year-over-year growth followed by non-store retailers and food services and drinking places. Only the electronics and appliance stores category experienced a year-over-year (YoY) decline. Food services and drinking places saw the largest gain from Q1-2025, while food-and-beverage stores and furniture stores categories experienced a slight decline from the previous quarter.

Source: CoStar (Data as of July 8, 2025)

Retail Real Estate Supply | Retail and Food Services Sales Performance | U.S. Employment Situation U.S. Shopping Center Performance Benchmark | Consumer Engagement | Consumer Sentiment

Limited Construction Keeps Retail Supply Conditions Tight

U.S. Employment (in Thousands)*

U.S. Employment Situation

The retail sector lost 24,400 jobs in Q2-2025 from the previous quarter. This is the first quarterly decline since Q3-2024 and the largest drop in two years. Despite the quarterly loss, there were still 28,700 more retail jobs on average in Q2-2025 compared to Q2-2024. The food services sector gained 30,100 jobs in Q2-2025. Q2 had an average of nearly 130,800 more food services jobs than Q2-2024. In the first half of 2025, the retail sector added nearly 24,000 jobs, while the food services sector gained about 2,000.

Food Services and Drinking Places

April May June

12,351.50 12,366.70 12,367.10

Retail

April May June

15,590.50 15,575.70 15,561.40

Drinking Places

Retail Food Services and

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April

May

June

Source: Bureau of Labor Statistics

* Seasonally adjusted

Net Absorption

Vacancy Rate

Millions of Square Feet

Vacancy Rate

Net Deliveries

Under Construction