Vacancy Moves up Across Retail

As store closures continue to make an impact in the sector, demand for retail space has also declined. Retail demand dropped for the second consecutive quarter in Q2 2025, with the overall retail vacancy rate at 4.3%. Absorption has been negative due to the bankruptcies that led to several store closures at the end of 2024 and into this year. 

 

As many retailers shut their doors, like Forever 21 and Party City, space availability rose by 7 million square feet during the second quarter. The increase brought total availability to the highest level in three years, but still below the prior 10-year average. 

 

Although store closures led to a rise in availability, they also provided an opportunity for tenants looking to grow. As some retailers close, market participants report they are able to lock in rent increases of 40% or more on these properties. This is notable as over half of the leases signed during H1 2025 were for properties on the market for less than 10 months.

 

Starbucks Among Latest Tenant Closures

The coffee giant recently announced its sixth consecutive quarter of annual same-store sales decreases. Following the news, Starbucks CEO Brian Niccol shared it is planning on closing up to 90 locations by the end of 2026. He stated that the closings will mostly impact stores with only mobile or pickup orders. 

 

Locations that operate solely on pickup orders only represent a minor portion of the company’s total stores, but some of these may be reworked to avoid closing. Starbucks will work on creating a prototype moving forward for new stores in standalone locations, which includes adding 32 seats and a drive-thru feature.

 

Additional Closures to Track

• At Home: The home goods retailer declared bankruptcy on June 16, citing retail-specific market pressure for its closings. It will close 26 stores that are underperforming by year-end. 

 

• Claire’s: Once a popular mall retailer, Claire’s filed for bankruptcy on August 6. It stated 1,100 stores that it is looking to close, and is on the search for a buyer for the remaining 800 locations. 

 

• Macy’s: While also a staple in malls, Macy’s announced its plans to close a total 150 stores by 2026. Locations for these stores range from New York, Florida, Arizona, and California.