Retail real estate occupancy costs reach their highest point in six years in 2024
Retail real estate occupancy costs reached a new high in 2024, marking a significant increase in expenses for businesses operating in this sector. Specifically, pet supplies stores experienced a substantial 48% rise in occupancy costs during the same period. While the amount of available retail space continued to decrease, the average time it took for landlords to fill vacancies peaked at 124 days, reaching its highest level in six years.
The surge in rental and occupancy costs in 2024 contributed to the extended period it took to occupy retail spaces. According to the “2025 Market Outlook Report” by Datex Property Solutions, a reputable provider of retail data on rent payments, operational performance, and leasing activities, the national average occupancy cost for retail brands climbed to 7.73% last year. This represents a notable increase from the 5.83% average recorded in 2023, indicating a nearly two-percentage point rise.
In addition to the escalating occupancy costs, the report highlighted that approximately 70% of rents for new leases saw an uptick in comparison to 63% in the previous year. This significant increase in rent prices and overall occupancy expenditures demonstrates the financial strain experienced by businesses in the retail real estate sector in 2024.
The findings from the report shed light on the challenges faced by retail businesses, particularly pet supplies stores, in sustaining their operations amidst rising occupancy costs. With a shrinking pool of available retail spaces and heightened rental rates, companies operating in this sector are grappling with the financial implications of the current market conditions. The prolonged time taken to fill vacancies further exacerbates the situation, reflecting the increased competition and financial burden on both landlords and tenants.
As businesses navigate the shifting landscape of retail real estate, it is crucial for them to carefully assess their cost structures and strategic decisions to ensure long-term sustainability. The data presented in the report underscores the importance of proactive financial planning and prudent lease negotiations to mitigate the impact of escalating occupancy costs on businesses’ bottom lines. By staying informed about market trends and adopting a proactive approach to managing expenses, retail businesses can navigate the challenges posed by the current economic environment and position themselves for success in the future.
