Retail leasing reached a structural turning point in 2025. For the first year on record, service-based retailers leased more space than traditional goods-based tenants.
And while the margin was narrow, 50.4% services to 49.6% goods, the crossover is meaningful as it reflects the long-running reallocation of consumer spending and the continued evolution of physical retail space toward uses that are less vulnerable to e-commerce.
Notably, this milestone came despite a pullback in retail leasing from the service side’s most significant contributor. Food services, a category that includes restaurants and taverns, saw its relative share of leasing decline to the lowest level of the post-pandemic period at just 16.8%.
This pullback occurred despite consumers spending more than ever on food away from home, underscoring the growing disconnect between sales performance and leasing activity. Margin compression, elevated labor and occupancy costs, and heightened competition following several years of rapid unit growth by food services retailers have begun to constrain expansion. In many markets, limited availability of economically viable restaurant space has become a binding constraint, particularly for smaller-format and value-oriented concepts. As a result, food service leasing activity moderated even as spending on food out of the home held steady.
While restaurant leasing dwindled, fitness emerged as one of the strongest service-sector leasing growth stories in 2025. Expansion activity increased meaningfully as consumers continued to prioritize health and wellness, supporting both national operators and specialized local concepts in adding locations.
Fitness tenants have proven particularly effective at absorbing second-generation retail space, including former big-box and junior anchor locations, reinforcing their appeal to landlords seeking durable demand and consistent traffic drivers.
Entertainment retailers also increased their share of leasing in 2025, extending a multi-year shift toward experiential retail. While still a relatively small portion of the overall retail leasing picture, entertainment posted one of the largest relative gains among all categories.
Retail concepts tied to recreation, immersive experiences and social interaction are playing a larger role in tenant mixes as landlords look to differentiate centers and extend the time customers remain onsite. Growth in this segment reflects both evolving consumer preferences and increased owner flexibility regarding nontraditional retail uses.