Retailer demand for space in prime locations remained robust in the fourth quarter despite subdued consumer sentiment in a number of major markets and lackluster global spending growth over the year. The retail sales outlook for 2025 is positive as stronger consumer spending growth is expected in most major markets, driven by rising real wages, resilient household balance sheets and continued increases in tourism spending.

Although retail bankruptcies have risen in the U.S. and Europe, availability is limited and space coming onto the market is being absorbed again quickly. Retailer activity also remains healthy in high-growth and tourism-oriented markets in Asia Pacific. Leasing activity is likely to be constrained in 2025 by falling new construction levels and low vacancy in mature markets. As a result, prime rents are expected to pick up in more locations due to increased competition among retailers for the best space.