The Puget Sound retail market continues to demonstrate stability as 2026 begins, supported by steady consumer spending and improving foot traffic across the region, according to a recent Kidder Mathews report.

While overall demand remains intact, shifting consumer behavior, driven by moderating job growth and persistent cost pressures, has led to a more selective leasing environment. Retailers are increasingly focused on efficiency and location quality. As a result, smaller-format and service-oriented spaces continue to outperform, while larger formats face more muted demand.

The Seattle retail market remains relatively tight, though vacancy has increased on a year-over-year basis. Construction activity remains concentrated in select suburban and mixed-use corridors, with projects such as Woodinville accounting for a meaningful share of new supply.

Leasing activity continues to be driven by smaller-format tenants, while larger spaces face longer absorption timelines and, in some cases, repositioning or redevelopment pressure. This ongoing divergence highlights a continued preference for smaller, service-oriented retail formats.