Boston Area Retail Market Report for Q1 2025

Overview

Boston’s retail market remains strong, driven by a solid consumer base and a prolonged shortage of new supply, which has kept retail availabilities at record lows. With cooling inflation and limited construction, the outlook for the next 12 months is stable. The area’s net in-migration and median household income, which is more than 40% higher than the national average, bode well for continued retail expenditure. These economic factors are expected to support demand and retail activity in Greater Boston.

Boston boasts the highest household income among major Northeast metros, with average annual household expenditures exceeding $100,000—34% higher than the national urban average. The city’s high housing costs contribute to this spending, but data shows that dining, apparel, and entertainment expenditures are especially prominent, at 142% of the U.S. urban average. This affluent consumer base has been beneficial for local retailers and continues to attract national and international brands seeking to enter or expand in the market.

However, the limited availability of retail space in Boston poses challenges for retailers looking to expand. Retail availability dropped to just 2.9% in 25Q1, the lowest of the 50 largest U.S. retail markets, while the national availability rate stands at 4.8%. The local construction pipeline is minimal, with new projects accounting for only 0.2% of the total inventory. Although some larger projects, including grocery anchors and auto dealerships, have broken ground, the construction volume remains low compared to the peak seen a decade ago, offering little relief to the constrained retail market.

The local economic outlook is cautiously optimistic, with moderate job growth of 1.2% year-over-year, particularly in the Leisure and Hospitality industry, which saw a 3.5% increase. Household incomes in the region have risen by 18% over the past four years, keeping pace with inflation. Despite national inflation falling, the Federal Reserve’s decision to cut rates in 2024 has left interest rates on hold in 2025. Retailers remain interested in Greater Boston, but they must compete for the limited available space. With steady demand and little new construction, rent trends are expected to hold steady in the near term, with potential for growth in the future if conditions remain favorable. 

As we analyze the current trends and future forecasts for Boston’s retail market, it’s crucial to stay informed and proactive. Whether you’re a retailer seeking space or an investor exploring opportunities, understanding these dynamics will be key to making strategic decisions in the coming year. Contact us today to learn more about how you can navigate this evolving retail landscape effectively!

Information provided by CoStar.com

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