The Seattle retail market softened in the second quarter of 2025, reflecting a broader national trend of declining consumer spending and economic uncertainty, according to a recent Kidder Mathews report.

U.S. retail sales dipped 0.1% in May, and the ports of Seattle and Tacoma reported reduced import and export volumes. Locally, vacancy and availability rates increased year-over-year to 3.9% and 3.6%, though still below the 10-year average of 4.4%, making Seattle one of the tightest retail markets nationally.

A key factor is the limited supply of new retail space and continued conversion of existing properties into mixed-use developments. From 2020 to 2024, the region lost 1.6 million square feet of retail inventory, the steepest decline in the nation.

Although average asking rents have fallen quarter-over-quarter, annual rent growth stands at 3.4%, outpacing the national average of 1.9%. While leasing activity dropped to a five-year low, investment picked up, totaling 974,000 square feet, up 10% from the first half of 2024.