H1 2025 Greater Boston Retail Market Report

Market Overview

A strong and stable consumer base, coupled with minimal new retail development, has kept retail space availability near historic lows in the Boston area. Robust job growth and rising household incomes have helped sustain a steady outlook for the local retail market, even as the national landscape grapples with economic challenges.

Greater Boston’s net population inflow and a median household income over 40% higher than the national average provide a solid foundation for continued retail spending. According to the latest Consumer Expenditure Survey, Boston leads all major Northeast metros in household income, driving average annual household expenditures to more than $100,000—34% above the U.S. urban average. While elevated housing costs explain some of this spending, the region also demonstrates exceptional consumer activity in categories like dining, apparel, and entertainment, with spending levels at 142% of the national urban average. This robust demand has fueled success for local retailers and continues to attract both national and global brands. However, expanding into the Boston market remains a challenge for retailers due to limited space. Retail availability in the metro fell to just 3.0% in Q2 2025— closely tracking, yet outperforming the national trend, which stands at 4.9%. Among the 50 largest retail markets in the U.S., Boston ranks among those with the lowest vacancy rates, currently standing at 2.6%.

Looking ahead, retail rents are expected to remain stable in the near term. Consistent demand and a limited development pipeline create favorable conditions for potential rent increases down the line. While local market fundamentals support retail growth, broader economic trends will remain an important factor to watch.

Rents | Vacancy | Construction

Greater Boston retail’s local economic outlook remains cautiously optimistic.

Retail supply in Greater Boston has historically expanded at a modest pace, with net deliveries remaining below 1% of total inventory annually since 2009—and in most years, falling short of 0.5%. This long-standing pattern continues today, as new retail construction remains subdued and well below historical norms. After peaking between 2014 and 2016, development activity has steadily declined. As of now, approximately 760,000 square feet of retail space is under construction—roughly half the 10-year average. Demolitions have barely topped 100,000 square feet this year, hovering near all-time lows, largely due to an uncertain financing environment that has stalled both new construction and redevelopment efforts across commercial property sectors. This slowdown culminated in 2024, when net retail deliveries totaled just 74,000 square feet—the lowest annual volume on record. While an easing of financial constraints could revive development, the region’s tight construction pipeline suggests only limited near-term expansion. With occupancy levels near capacity, minimal new supply anticipated, and strong consumer fundamentals, upward pressure on rents appears inevitable.

Greater Boston Under Construction Properties

Source: CoStar Group

By the Numbers

Sales Volume: $701.2M
Rent Growth: 1.2%
Vacancy Rate: 2.6%
Cap Rate: 6.6%
Market Asking Rent Per SF: $28.05
SF Under Construction: 763K
SF Delivered: 203K
SF Absorbed: (291K) | H125 | Source: CoStar Group

Sales

Retail investment activity in Boston peaked in 2022, with nearly $3 billion in transaction volume—a record high for the market. Since then, sales activity has declined, in line with the broader national slowdown in deal flow. Elevated interest rates have undoubtedly played a role in the decline of retail investment activity, though retail transactions are often less reliant on debt compared to other commercial real estate sectors. This is largely because the market features a high proportion of smaller, lower-priced assets that appeal to local investors. Over the past two years, approximately 55% of retail properties sold in Boston were under 5,000 square feet, and more than 75% were valued below $2 million. That said, large-scale transactions have continued to make their mark on the market. Among the most notable over the past 12 months was the $86 million sale of Colony Place in Plymouth. The deal included nine buildings totaling nearly 400,000 square feet and represented one of the region’s largest open-air shopping center sales.