10 Worst-Performing U.S. Retail Markets (Mid-2025)

Overview: Real estate investors are closely watching retail markets amid a nationwide pullback in demand. According to CoStar’s July 2025 Retail National Report, the first half of 2025 saw negative net absorption for U.S. retail – the first quarterly decline since 2020 – as a wave of retailer bankruptcies and store closures hit the market. Several metro areas stand out as the worst-performing retail markets based on a combination of high vacancy rates, oversupply of space (new construction far exceeding demand), low or negative rent growth, and negative net absorption over the past 12 months. Below, we identify the 10 weakest U.S. retail markets through mid-2025, with key metrics and analysis for each.

To compare these troubled markets at a glance, the table below summarizes their vacancy rates, net absorption, rent growth, and new supply levels:

(Vacancy Rates are approximate; “↑” indicates an increase. “MSF” = million square feet. “% of inv” = percentage of total inventory.)

As shown above, these markets all suffer from supply-demand imbalances. New retail construction and space deliveries (often several million square feet, 5–8% of inventory in many cases) have far outpaced net leasing demand – leading to rising vacancies. Most of these metros saw negative net absorption, meaning more space was vacated than leased over the past year. Rent growth is anaemic at best; notably, several markets (East Bay, Pittsburgh, Oklahoma City, Cincinnati) even experienced year-over-year rent declines, a rare occurrence in recent years. Below we delve into each market’s situation, the likely causes of distress, and implications for investors.

Los Angeles, California

Los Angeles – the nation’s second-largest retail market – has been hit by a wave of big-box store closures and oversupply. Over the past year, L.A. added 26.4 million SF of new retail space (about 5.9% of inventory), yet net absorption was –2.43 million SF (negative). This surge of new construction combined with move-outs pushed the vacancy rate above the U.S. average, into the mid-single digits. Rents have started to slip; L.A.’s asking rents fell –0.5% year-over-year, a notable decline after years of growth.

Causes: The Los Angeles region saw several retail bankruptcies and consolidations (e.g. closures of anchor stores in malls and large-format retailers). A “wave of big-box move-outs” in Southern California was reported in early 2025, which drove L.A.’s retail vacancy up. Meanwhile, developers had continued to build or deliver shopping center projects in growth corridors, overshooting current demand. The result is excess supply and pressure on landlords to backfill large vacancies.

Implications: Investors in L.A. retail real estate should be prepared for longer lease-up times and increased concessions. High vacancies in power centers and malls may offer opportunities for value-add repositioning, but only at discounted acquisition prices to account for leasing risk. Until demand catches up with supply, rent growth is likely to remain subdued or negative. Caution is warranted, especially for properties in submarkets with new construction competition.

Detroit, Michigan

Detroit’s retail market is struggling with persistent oversupply and soft demand. Roughly 15.5 million SF of retail space (5.9% of inventory) was delivered in the last 12 months, while net absorption was –2.29 million SF. Vacancy in metro Detroit has ticked up to around 6% (a slight rise year-over-year), and rent growth is barely 1.6% annually – trailing inflation. Detroit actually experienced one of the largest net occupancy losses among major markets this period.

Causes: Detroit’s economic and demographic challenges underlie its weak retail performance. Population decline and slow income growth in parts of the metro limit retail demand. Yet, developers added space (e.g. new power centers in suburbs), contributing to an overbuilt market. Additionally, big retail bankruptcies (e.g. Bed Bath & Beyond, regional department stores) led to major store closures in Metro Detroit, putting large blocks of space back on the market.

Implications: With excess vacant space and few new tenants expanding, landlords face competitive pressure. Investors should expect elevated cap rates for Detroit retail assets and budget for higher vacancy and re-tenanting costs. Well-located centers (e.g. grocery-anchored strips in stable neighborhoods) can still perform, but fringe and older properties may struggle to retain relevance. Until the supply-demand imbalance corrects – potentially through redevelopment or demolition of obsolete space – Detroit’s retail market will remain a tenant’s market.

East Bay (Oakland), California

The East Bay market (Oakland and surrounding communities) is experiencing rental decline and rising vacancy despite positive absorption. About 7.0 MSF of new retail space came online in the East Bay (a hefty 5.7% of inventory), but only 0.39 MSF was absorbed. Essentially, supply growth far outpaced demand. The vacancy rate has climbed (into the upper-single digits by local estimates), and notably asking rents fell –2.6% year-over-year – one of the steepest declines of any market.

Causes: Several factors have converged in the East Bay. Aggressive retail development in growing suburbs (and lifestyle center projects in wealthier enclaves) added space, but consumer spending didn’t keep up. Simultaneously, store closings (including some national chain bankruptcies) left behind big vacancies in older shopping corridors. The East Bay’s proximity to a booming e-commerce logistics hub (the Inland Empire) also siphons some retail demand as consumer habits shift online. The result is overbuilt retail nodes and downward pressure on rents, especially in aging malls and power centers struggling to compete.

Implications: Investors should be wary of East Bay retail centers that are not top-tier. The market’s rent decline signals that tenants have leverage – they can negotiate favorable deals given abundant options. Well-located urban retail in Oakland proper may fare better, but suburban retail cap rates are likely rising. Redevelopment opportunities (e.g. converting excess retail space to other uses) could emerge as highest-and-best-use calculations change. Cautious underwriting of rent growth (if any) is prudent until the East Bay works through its glut of space.

Pittsburgh, Pennsylvania

Pittsburgh’s retail fundamentals have weakened significantly. The metro saw over 7.0 MSF of new deliveries (4.5% of stock) in the past year, but demand stagnated – net absorption was slightly negative (–181,800 SF). Vacancies have inched upward (now around 5% and rising), and critically asking rents dropped by –4.6% year-on-year, making Pittsburgh one of the worst rent-growth markets in the country. This negative rent growth (a –4.6% decline) indicates landlords are cutting rents to attract tenants amid soft demand.

Causes: A few large retail developments (including expansions of open-air centers) came online in Pittsburgh recently, adding supply in excess of current needs. At the same time, several chain store closures hit the region (for example, closures of underperforming discount stores and some mall retailers), leading to move-outs. Pittsburgh’s population is flat to declining, so organic retail demand growth is limited. The combination of new space and store consolidations created a double whammy: higher vacancy and falling rents as older spaces compete for a shrinking pool of tenants.

Implications: Investors in Pittsburgh retail should factor in the potential for prolonged vacancy and further rent softness. Properties may require creative leasing strategies (such as non-traditional tenants or adaptive reuses) to backfill empty spaces. On the upside, minimal new construction is likely moving forward (given current conditions), which could help the market stabilize in the long term. But in the near term, Pittsburgh exemplifies a market where retail income streams are under pressure, and underwriting should assume modest or negative rent growth until absorption catches up.

New Haven, Connecticut

Greater New Haven has emerged as one of the weakest retail markets in 2025. Over the past year, the New Haven/Milford area delivered 3.93 MSF of new retail space – a huge 7.2% of inventory – while net absorption was –1.10 MSF (–2.0% of inventory). This massive oversupply spike sent the vacancy rate toward double digits. Rent growth has effectively stalled at +0.6% YOY, barely above zero. New Haven thus faces both high vacancy and zero rent growth – a troubling combination.

Causes: New Haven’s retail woes stem from overbuilding and economic stagnation. Several retail projects (including expansions of shopping centers along major highways) were completed recently, banking on future growth that has not materialized. Consumer spending in the area is lackluster, and no major influx of new retailers has arrived to fill the space. Additionally, competition from nearby retail hubs (e.g. in Hartford or New York metro) and e-commerce gains have dampened local store performance. With store closures (e.g. a regional grocery chain bankruptcy) adding vacant space, New Haven’s retail sector simply cannot absorb the surplus.

Implications: Investors should view New Haven as a high-vacancy, low-growth market in the near term. Expect higher cap rates to compensate for leasing risk. Some properties may struggle to maintain occupancy; debt underwriting in this market will be tighter as lenders recognize the weak fundamentals. Adaptive reuse or redevelopment of excess retail (into medical, residential, or other uses) could be a theme as owners seek alternatives. Until the economy or population of New Haven sees a boost, new retail demand will be limited – meaning it could take years to work through the current glut of space.

Oklahoma City, Oklahoma

Oklahoma City’s retail market, while historically steady, has tipped into oversupply recently. About 5.59 MSF of new retail space (5.5% of inventory) came on line in the last 12 months, but net absorption was –190,000 SF. Vacancy has consequently risen (hovering around 9% now, up from the high-8% range a year ago) and rents have begun to decline (–0.6% YOY). OKC hadn’t seen negative rent growth in many years, signaling that landlords are now reducing rents to attract tenants.

Causes: Aggressive development is a primary culprit. Oklahoma City saw new power centers and retail pads delivered in fast-growing suburban areas (for example, along the I-35 corridor) – but tenant demand hasn’t kept up. Some national retailers have pulled back or closed stores, leaving newly built space empty. Additionally, oil industry volatility can affect the region’s economy and retail spending; any softness in the local economy quickly translates to weaker retail absorption. The recent uptick in store closures nationally (e.g. some big-box apparel and home goods stores) also affected OKC, contributing to the net occupancy loss.

Implications: For investors, Oklahoma City’s retail properties now carry higher leasing risk. Until the vacant new space is absorbed, rent growth will likely remain negative or flat. Investors may find opportunities in distressed or motivated sales of newly built centers that failed to lease up – but must underwrite very conservatively. The long-term outlook depends on the metro’s continued population and job growth; if OKC’s growth story resumes, excess space can be absorbed, but in the short term the market will favor tenants. Expect landlords to offer generous incentives to fill vacancies.

Cincinnati, Ohio

Cincinnati’s retail market is underperforming in 2025 due to a mild oversupply situation and softening rents. Approximately 7.36 MSF of new retail space (5.5% of inventory) was delivered in Greater Cincinnati in the past year, while net absorption was essentially flat (–61,000 SF). Vacancy has edged up (around the mid-single-digit range, after hitting a low below 6% last year). Notably, Cincinnati saw a –1.0% year-over-year decline in asking rents – a reversal for a market that previously enjoyed modest rent growth.

Causes: Cincinnati had a wave of new retail development in suburban communities and lifestyle centers, contributing to excess supply. At the same time, several chain stores closed locations in the region (including some mid-tier apparel and home goods stores that struggled nationally), which offset any new leasing gains. Cincinnati’s population and retail sales growth are moderate, so it doesn’t take much oversupply to tip the scales. Essentially, the market became slightly overbuilt relative to demand, and landlords had to start cutting rents to backfill space (hence the rent decline).

Implications: While Cincinnati is not in a crisis, investors should note the downward pressure on rents and occupancy. Well-positioned shopping centers (e.g. in high-income suburbs) will still find tenants, but older centers or those in saturated submarkets could see higher vacancy and concession levels. Investors might target Cincinnati assets at a discount now, betting on a recovery – but the timing could be slow. In the interim, cash flow growth will be limited. Focus on asset quality and location is key; properties that can differentiate (through experience-based retail, entertainment, or service tenancy) will fare better in this competitive environment.

Philadelphia, Pennsylvania

Philadelphia stands out for its high retail vacancy – currently around 12%, one of the highest among large U.S. metros. Over the past 12 months, Philly added 14.7 MSF of new retail space (4.3% of inventory) while absorption was flat, meaning essentially no net new demand to fill the space. The vacancy rate has consequently ballooned into double digits. Rent growth in Philadelphia is barely positive (+1.4% YOY), underperforming the national average, and could turn negative if vacancies continue to mount.

Causes: Philadelphia’s high vacancy can be traced to legacy mall struggles and over-retailing in suburbs. The metro has numerous older shopping centers and malls that have lost anchor tenants (e.g. due to bankruptcies of chains like Sears, Kmart, etc., in recent years). Many of those spaces remain empty or only partially repurposed, contributing to the elevated vacancy rate. Additionally, developers built new retail (often big-box power centers) in growth zones outside Philly, adding to inventory even as urban retail corridors saw tenants consolidate or close. The result is a classic demand shortfall – new space keeps coming, but total occupied space isn’t growing.

Implications: Investors in Philadelphia retail must navigate a tenant-favorable market. The abundance of available space (12% vacancy) gives retailers plenty of choices and bargaining power on rents. Asset values for under-leased properties may be under pressure, creating potential opportunistic plays – e.g. acquiring at a discount for redevelopment. However, any value-add strategy should account for long lease-up periods. On the positive side, Philadelphia’s economy is sizeable, and some submarkets (Center City, premium suburban town centers) still see healthy demand. But overall, until obsolete retail stock is taken off-market or repurposed, Philadelphia’s retail metrics will remain weak.

Flint, Michigan

Flint is a smaller market but epitomizes the worst of retail real estate trends. In the past year, Flint (Genesee County) saw 2.28 MSF of deliveries – a huge 8.0% of inventory – even as net absorption was –374,000 SF. Vacancy has soared into the double digits (estimated around 12% or higher), reflecting a glut of empty space. Rent growth is essentially nonexistent at +0.9% YOY, and given the economic headwinds in Flint, rents could easily decline. Flint is arguably one of the most overbuilt and demand-challenged retail markets in the nation.

Causes: Flint’s retail distress is rooted in severe economic decline and misguided development. The area’s population and incomes have been falling or stagnant for decades (exacerbated by the auto industry downsizing), undermining retail sales. Despite this, some new retail projects (often national chains looking for cheap sites) added space in recent years – resulting in oversupply in a shrinking market. Additionally, Flint has lost many national retailers due to bankruptcies or pullbacks (e.g. closures of big-box stores like JCPenney or art-and-craft chains that left malls). With little backfill demand, vacant square footage piled up quickly.

Implications: Flint represents a cautionary tale – investors should be extremely cautious and demand deep discounts for any retail acquisition here. Many retail properties in Flint may not be economically viable long-term and could face repurposing to non-retail uses. Expect high capitalization rates and low rental growth assumptions. In fact, some investors might only consider Flint retail for redevelopment value (e.g. as industrial or multifamily, if zoning allows). The implication for broader markets: in areas with declining fundamentals, adding new retail space is value-destructive. For Flint to recover, it will likely require shedding excess retail stock and a substantial economic turnaround.

Hartford, Connecticut

Greater Hartford’s retail market is limping along with minimal demand growth and rising vacancy. In the last year, Hartford delivered 3.34 MSF of new retail space (4.3% of inventory) and managed to absorb only 0.08 MSF in that time – effectively flat demand. The vacancy rate, which was low previously (~4%), has ticked up toward ~5% and will likely rise further given the pipeline of unleased new space. Hartford’s rent growth was 0.0% year-over-year – essentially no growth – indicating a very weak landlord position.

Causes: Hartford’s challenges stem from being a slow-growth, mature market that nonetheless saw pockets of new retail development. The local economy and population are fairly static, so retail demand grows slowly if at all. However, developers added retail in certain suburbs (anticipating housing growth or new developments that have been slow to materialize). The result is excess retail capacity. Additionally, Hartford’s consumers have numerous options including strong retail hubs in adjacent areas (and high e-commerce adoption), so existing retailers aren’t expanding much. A few store closings (e.g. some mall retailers) further tipped the scales to oversupply.

Implications: Investors in Hartford retail should temper expectations for rent increases or rapid leasing. Stable properties with credit tenants will hold value, but any center with vacancy issues could struggle for the foreseeable future. Given the zero rent growth, real returns will rely on initial yield rather than growth – implying buyers will seek lower prices. On the upside, Hartford’s vacancy is not as severely high as some markets, so a modest recovery is possible if no new supply comes and the economy stays steady. Still, as an investor or lender, one should underwrite with zero rent growth and slow absorption in mind. Adaptive reuse may be a consideration for the most overbuilt nodes (e.g. aging strip centers) to realign supply with the market’s true demand.

Conclusion

Midway through 2025, these 10 markets exhibit the softest retail real estate fundamentals in the U.S. Each suffers from a combination of too much retail space and not enough tenant demand. For investors, the common theme is caution: high vacancies and minimal rent growth mean that income streams are weaker and riskier in these metros. Any new acquisitions in such markets should be underwritten with conservative assumptions (low occupancy, flat or negative rent growth) and perhaps a value-add or repurposing plan to navigate the oversupply.

On a positive note, the broader U.S. retail market still has many healthy areas – and even in these 10 markets, the struggles are often concentrated in certain property types (e.g. old malls or power centers) while grocery-anchored centers and essential retail can perform relatively better. Nonetheless, the July 2025 CoStar report makes clear that after years of stable performance, retail real estate is entering a more challenging phase. Investors would do well to heed the warning signs in these underperforming markets – they illustrate what happens when new supply overshoots demand, and they remind us to rigorously evaluate local market conditions before investing.

Sources: Data from CoStar United States Retail National Report (July 4, 2025) and associated market data tables. All metrics reflect the 12 months ending Q2 2025 as reported by CoStar.

📌 General Market Context & National Trends

• CoStar, United States Retail National Report, July 4, 2025, pp. 3–5: Negative net absorption trends, store closures, and availability rates United States-Retail-Co

• CoStar, Sales Overview, p. 10: Investment market dynamics and retail cap rate behavior United States-Retail-Co

  
  

📌 Market-Specific Data Sources

1. Los Angeles, CA

• Vacancy, Net Absorption: p. 35 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

• Commentary on move-outs: p. 9 United States-Retail-Co

2. Detroit, MI

• Vacancy, Absorption: p. 35 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

3. East Bay (Oakland), CA

• Net Absorption, Construction: p. 33 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

4. Pittsburgh, PA

• Vacancy, Absorption: p. 34 United States-Retail-Co

• Rent Decline: p. 30 United States-Retail-Co

5. New Haven, CT

• Vacancy, Net Absorption: p. 34 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

6. Oklahoma City, OK

• Vacancy, Absorption: p. 34 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

7. Cincinnati, OH

• Net Absorption: p. 35 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

8. Philadelphia, PA

• Vacancy Rate: p. 34 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

9. Flint, MI

• Vacancy, Net Absorption: p. 34 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co

10. Hartford, CT

• Vacancy, Absorption: p. 34 United States-Retail-Co

• Rent Growth: p. 30 United States-Retail-Co