Retailers are preparing for a season that’s looking more “meh” than merry. One forecast says holiday retail sales growth will crawl between 2.9% and 3.4% this year basically, the economy’s equivalent of showing up to the party and leaving before dessert.
And just in case that wasn’t thrilling enough, another report expects only 1.2% growth during the peak shopping window. Basically, shoppers are tightening wallets, skipping impulse buys, and probably pretending they “love” homemade gifts again.
When people stop buying, retailers stop smiling. They stock less, hire fewer, and start looking at their stores like expensive hobbies they can’t afford anymore. For years, the holiday season has been retail’s time to shine the make-or-break quarter that decides whether stores are expanding or quietly closing up shop by spring. But this year, many are bracing for disappointment instead of celebration.
The culprit? Inflation fatigue, higher interest rates, and a sprinkle of consumer guilt. People are more focused on paying bills than buying glittery sweaters they’ll wear once. The “revenge spending” trend that kept post-pandemic retail alive is officially out of steam, replaced by “revenge saving.”
So, How Does This Affect Commercial Real Estate?
Here’s where the plot thickens. When stores make less money, commercial real estate starts sweating. Fewer sales mean fewer leases, and suddenly, that shiny retail plaza starts to feel more like a ghost town with better landscaping.
Vacancy rates are creeping up, and net absorption (that’s the fancy way of saying “how much space is actually being rented”) is going negative.
And it’s not just the sad mall in the middle of nowhere. Even high-traffic shopping centers are rethinking their tenant mix. Some landlords are sweet-talking tenants with rent discounts, free months, or metaphorical hugs to keep them from bolting. Others are trying to pivot, turning empty anchor spaces into gyms, pop-ups, or community centers. Because nothing screams “economic uncertainty” like replacing a department store with a pickleball court.
Traditional malls are already in their “reinvention era”, turning into mixed-use spaces that scream, “Remember when people shopped here?” Movie theaters, coworking spaces, and even medical offices are taking over those empty storefronts. It’s not glamorous, but at least it’s rent.
Why This Matters For Statewide Real Estate Planning
If you think this is just a one-mall problem, think again. Retail is the canary in the commercial real estate coal mine. When it starts coughing, everyone pays attention.
Across states, here’s what could go down:
The thing about real estate is that it’s one big ecosystem if one branch droops, the rest follows. A weak retail season trickles into smaller tax revenues, slower development projects, and fewer commercial expansions overall. And as much as landlords hate hearing it, online shopping isn’t slowing down either. More e-commerce means more warehouses and fewer shoppers walking into stores that smell like cinnamon-scented debt.
What To Keep Your Eyes On
If you’re the kind of person who checks data like others check their horoscope, here’s what to watch:
Also, keep an eye on how local governments respond. Some are rolling out incentives to repurpose dead retail zones, turning them into mixed-use developments or housing projects. Because if people aren’t shopping there, they might as well live there, right?
The Short Version
So, yeah, holiday retail might be the Grinch this year. And while consumers will survive on deals and DIY gifts, commercial real estate might not be so jolly.
Landlords, investors, and agents will have to get creative, think less “Black Friday madness,” more “strategic survival.” Some will pivot beautifully. Others will hold on like that one Christmas ornament you refuse to throw away.
Because when Santa’s sleigh starts slowing down, even the real estate elves feel it.
