Retail asking rent growth slowed to 1.9% year-over-year during the first quarter, extending a downward trend that started in 2024.
According to a data analysis from CoStar Group (NASDAQ: CSGP), several Sun Belt markets that led rent growth earlier in the cycle – including Phoenix, Orlando, Atlanta, and Charlotte – posted solid year-over-year gains at the end of the first quarter. However, their growth rates slowed as asking rents reset to higher plateaus.
In contrast, Midwestern markets are showing renewed momentum. Minneapolis posted the strongest year-over-year rent gains nationally, at 6.9%, with Columbus, Milwaukee, Cincinnati, Kansas City, and St. Louis also ranking among the better‑performing markets.
“While US retail fundamentals remain healthy, a slight loosening in vacancy alongside moderating tenant sales growth has reduced landlords’ ability to push rents at the pace seen immediately after the pandemic,” said Brandon Svec, national director of retail analytics at CoStar Group. “This slowdown is less of a sign of weakening demand than a function of normalization. As sales growth has leveled out across most retail segments, occupancy costs have risen back to pre-pandemic norms. With rent-to-sales ratios now more closely aligned with historical averages, and operating costs and interest rates remaining elevated, tenants have become more resistant to additional rent pressure, particularly in discretionary categories. As a result, asking rent growth has moderated even as leasing activity and occupancy remain relatively strong.”
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