Datex: Retail real estate occupancy costs hit a six-year high in 2024
Though available retail space remains at historically low levels, the average number of days (124) it took landlords to fill vacancies hit a six-year high in 2024.
That’s because rent and occupancy costs (rents plus triple nets divided by reported sales) also hit six-year highs, according to a “2025 Market Outlook Report” from Datex Property Solutions, a data provider of retail rent payments, operating performance, and leasing activity to both landlords and tenants.
The national average occupancy cost for retail brands rose to 7.73% last year, a nearly two-percentage point increase over 2023’s average of 5.83%. At the same time, nearly 70% of rents on new leases increased, compared to 63% the previous year.
“With renewals, both the landlords and the tenants go into the leasing conversation knowing that the tenant is making money and the grass isn’t greener in the center down the block,” said Datex CEO Mark Sigal. “New tenants, however, are cautious. They’re wary of rising occupancy costs and worried about the economy. Deals are still going down, but at a slightly slower pace.”
Pet supplies stores took the hardest hit in 2024, suffering through occupancy cost increases that were 48% higher than in 2023. Other retail categories feeling the pain included dollar stores (+12%), drug stores (+11%), and specialty food (+10%).
Categories on the other side of the occupancy cost coin were sporting goods retailers (-29%) and grocers (-15%).
Average rental rates in 2024 hit $16.59 per sq. ft., a 9% increase over 2022. The Datex report noted that rent collections remained strong at 92%, another six-year high dating back to 2019.
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“Merchants are starting to get a little more cautious about which new spaces they take and where they hold the line,” Sigal said. “We’re not seeing the kind of frenzy we saw in the market in 2023 when lots of deals were getting done on new leases. But we’re seeing strong renewal activity, in which brands stick with locations they know will continue to work for them.”
