Retail Resilience: Holiday Sales Surge and What It Means for CRE
Despite high inflation and economic headwinds, the 2025 holiday shopping season exceeded expectations. U.S. retail holiday sales surpassed $1 trillion, growing approximately 4% year-over-year, reinforcing the role of sustained consumer demand in stabilizing retail real estate performance across multiple formats.
The strong holiday retail performance highlights consumers’ adaptability, as shoppers are more value-driven, leveraging deals and digital tools to stretch budgets while still powering consumption.
Inflation & Rates Still at a Headwind
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2026 projects a slow decline in inflation, with cautious optimism around progress toward the Federal Reserve’s 2% target.
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Persistent inflation, tariffs, and broader economic uncertainty have constrained discretionary spending among many consumers.
This environment has shaped retail behavior, with consumers prioritizing value, promotions, and everyday essentials, even as overall spending held up.
Retail Performance & Emerging Patterns
In 2025 and early 2026, the retail RE market displayed mixed but notable trends. Driven by necessity-based foot traffic, prime and grocery-anchored centers continue to outperform. Secondary centers, however, face ongoing pressure from footprint rationalization and shifting consumer behavior. As investors refocused on experience-driven and repositioned properties, mall transactions increased. These deals prioritize redevelopments and property enhancements over conventional leasing, reflecting a selective investment approach. This momentum also contributed to the growth in e-commerce and, combined with uneven discretionary category performance, emphasized the importance of adaptive tenant strategies and strategic property positioning.
CRE Takeaways: What This Means for Investors
The retail real estate market is showing resilience amid shifting consumer behavior and macroeconomic pressures, but success increasingly depends on strategic asset selection. Investors should focus on properties that offer stable cash flow, strong tenant performance, and adaptability to changing market dynamics. Key considerations include:
- High-quality, resilient assets
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Prime retail locations and grocery-anchored centers continue to outperform due to consistent foot traffic and reliable tenant sales
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Prioritize assets with strong occupancy, durable tenants, and necessity-driven demand.
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- Selective Approach to Malls and Secondary Assets
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Malls are attracting renewed interest, but mainly experience-driven, well-repositioned properties are drawing capital.
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Secondary or discretionary-focused centers face challenges from footprint rationalization, e-commerce, and evolving consumer preferences.
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- Macro Factors Matter
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Inflation, interest rates, and consumer spending trends influence valuations and cash flow stability.
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Assets that can weather moderate inflation and shifting demand will outperform over time.
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- Adapting to Consumer Behavior
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E-commerce growth and uneven discretionary sales highlight the need for adaptive tenant strategies
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Consider tenant mix, experiential offerings, and omnichannel integration to maintain competitiveness.
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- Opportunities in Strategy and Repositioning
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Repositioned, redeveloped, or experience-enhanced properties are more likely to attract tenants and investors.
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Looking Ahead for 2026
In 2026, retail will continue to reflect evolving consumer behavior and economic conditions. Pricing sensitivity, selective promotional strategies, and shifting seasonal hiring trends are influencing shopping patterns, while the performance gap between stronger and weaker retail assets underscores the importance of adaptive reuse and strategic repositioning.
Understanding which retail assets will thrive in 2026 requires data, experience, and foresight. Lowery Property Advisors delivers market analysis and property-level insights to help you identify high-performing opportunities, manage risk, and position your portfolio for success.
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