Scrooge kept out of the way of retailers in December, leaving investors to enjoy the holiday season to the full. Retail property prices and effective lease rates both jumped, space was tight and landlords made fewer concessions to their tenants. Indeed, retail closed 2025 with its strongest fundamentals in years, according to Crexi’s CRE report for the month.
Among those fundamentals: record holiday consumer activity and a constrained new supply of retail space. A record 202.9 million shoppers opened their purses between Thanksgiving and Cyber Monday. Cyber Monday itself hit a new online sales peak of $14.25 billion, up 7.1% year-over-year. Black Friday hardly lived up to its name with retail sales of $11.8 billion (up 9.1% year-over-year). And Cyber Week sales totaled $44.2 billion, up 7.7% year-over-year, thanks to consumers taking advantage of buy-now-pay-later options and AI shopping tools.
“The holiday surge validated retail's resilience as value-oriented retailers attracted more high-income shoppers seeking deals,” Crexi stated.
From CRE investment perspective, there was a modest 0.3% month-over-month increase in average sales prices, at $288.61 per square foot, but a “striking” 30.5% boost year-over-year. Asking prices rose to $292.96 per square foot – up 4.5% month-over-month and 8.3% from 2024 – hinting at confidence among sellers. Another sign of seller confidence was asking cap rates coming in at 6.39% – 14 bps from the previous 12 months. Closed-deal cap rates compressed five bps from the previous month to 6.54%, down 10 bps year-over-year.
Asking rents were flat from November at $19.32 per square foot, though 2.3% above year-ago levels. Effective rents, however, climbed 2.3% month over month to $22.52 per square foot, 10.6% up year over year.
“The widening gap shows landlords in prime locations are getting asking rates or better, while even secondary properties are securing stronger lease terms with fewer concessions as tenant demand remains strong,” Crexi commented.
There was also a dramatic decrease in retail vacancy. It fell 100 basis points to 5.6% month over month and 300 bps lower than December 2024. This marked the tightest inventory level in more than two years as retailers took back more space than they gave up in the fourth quarter. It also underscored persistent supply constraints across most sub-markets, Crexi noted.
For investors, the message is to prioritize grocery-anchored centers and daily-needs retail in dense suburban corridors where effective rents outpace asking rents, Crexi commented.
“Target assets in Sun Belt markets with strong population growth while maintaining selectivity on older secondary properties that may require capital investment to compete for quality tenants.”
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