Retail leasing reached a major turning point in 2025. For the first time on record, service-based retailers leased more space than goods retailers.
Service tenants accounted for 50.4% of leasing activity, while goods retailers held 49.6%. Although the margin was narrow, the shift signals a major change in retail demand.
Importantly, the change reflects shifting consumer spending patterns. Additionally, retail space continues evolving toward uses less vulnerable to e-commerce disruption.
However, leasing from the service sector’s largest category declined. Food service tenants, including restaurants and taverns, represented 16.8% of leasing activity, the lowest level since the pandemic.
This decline occurred despite strong consumer spending on dining out. Rising labor costs, occupancy costs, and competition have limited restaurant expansion.
Additionally, many markets face limited availability of suitable restaurant space. As a result, restaurant leasing activity slowed across several regions.
Meanwhile, fitness operators emerged as a major retail leasing driver in 2025. Expansion increased as consumers continued prioritizing health and wellness.
Fitness brands have also proven effective at repurposing second-generation retail space. Many operators are leasing former big-box and junior anchor locations.
Consequently, fitness tenants continue attracting strong landlord interest. These operators provide consistent traffic and long-term stability for retail properties.
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