Here are the best-performing retail markets of 2025

Article originally posted on CoStar on December 18, 2025

U.S. retail real estate delivered another year of resilience in 2025, marked by a steady balance between supply and demand, despite pressure from increased store closings.

Under the surface, market-by-market performance varied more than in any year since the pandemic, as the disparate effect from store closures and diverging demographic trends created a larger gap between the winners and losers.

With Sun Belt cities still dominating the rankings amid demographic growth and business-friendly conditions, Charlotte, with a market area that straddles both North and South Carolina, emerged as the nation’s top-performing retail market of the year.

Similar to our 2024 list, this year’s top-performing rankings were based on five equally weighted indicators: Percent of inventory leased, availability rate, market rent growth, change in sales volume, and total return for retail properties as measured by CoStar’s market price index. These measures collectively capture occupancy strength, pricing power, transaction momentum and investment performance, offering a comprehensive view of market health.

When combining all those indicators, the top five markets were Charlotte, Tampa and Orlando in Florida, Norfolk in Virginia, and Dallas underscoring the continued strength of the Southeast and Southwest regions. These rankings highlight the enduring appeal of markets with demographic tailwinds, diversified economies, and disciplined supply pipelines, and Charlotte’s rise to the top was predicated on each of these three factors.

Charlotte added more than 215,000 residents between 2020 and 2024, and white-collar job growth in 2025 outpaced a slower national labor market, fueling substantial greenfield housing development in the suburbs. Neighborhood retail, particularly newly built grocery-anchored centers, has been a magnet for brand expansion from fitness, discounters, grocers, and home goods-related tenants.

Though a handful of retailer bankruptcies late last year resulted in negative absorption, or a net loss in overall occupancy, the best-located big box locations were quickly backfilled by other brands eager to expand in these market areas. Strong demand for backfill space helped Charlotte generate the strongest rent growth of any major U.S. retail market in 2025 at an annualized average of 7.4%.

Over the past decade, retail rents have risen nearly 57%, compared to an average increase of 34% nationwide. In fact, Charlotte’s average asking rent reached $26.25 per square foot in the third quarter, exceeding the national average of $25.80 per square foot for the first time on record.

Outside of Charlotte, the rest of the top 10 U.S. retail markets for 2025 reflect a mix of established growth hubs and emerging contenders, and in Florida, Tampa and Orlando continued to benefit from strong population inflows and tight retail space availability, while Dallas leveraged its scale and transaction activity to secure a top-five position.

Norfolk, Virginia, including the larger Hampton Roads area, surprised with robust retail leasing and renewed investor interest, while Kansas City climbed into sixth place on the strength of solid returns and increased retail property sales. Nashville, Tennessee, and Miami, Florida, reaffirmed their status as high-demand retail Sun Belt metropolitan areas, with Miami posting one of the largest increases in retail property sales volume nationally, and Nashville generating the third-highest rent growth. Phoenix remained a steady performer across categories, while Columbus, Ohio, held its place as one of the Midwest’s few standout performers.

Looking ahead to 2026, the Southeast and Southwest regions appear well-positioned to maintain their strong retail performance. Though moderating rent growth and a limited supply of for-sale inventory could reshape capital flows, market-based retail performance appear poised to hold steady, supported by limited supply pipelines and resilient consumer demand.