The National Retail Federation predicts a record-breaking 2025 holiday season, with U.S. sales for November and December projected to grow between 3.7 percent and 4.2 percent—pushing total holiday sales past $1 trillion for the first time. Yet there also are signs that consumers are nervous; that mood, plus accounting for inflation, could leave holiday spending relatively flat.
Urban Land: Consumers play a huge role in the U.S. economy. What’s your view on the strength of consumer spending, and what are the downstream impacts to watch in commercial real estate?
Nicole Larson, national research manager for retail services, Colliers
Despite mixed economic signals, consumer spending remains resilient as the 2025 holiday season approaches. We expect retail holiday sales to rise by about 3.1 percent—solid growth, but softer than the decade average once inflation is considered. Spending is increasingly value-driven: Consumers are more selective with gifting, reducing spend on lower-priority items, yet still investing in personal and milestone occasions. This is fueling strong performance during discount-led events like Cyber Days and Black Friday, where sales are projected to grow 6.37 percent and 3.09 percent, respectively.
Online will be the primary growth engine, with sales increasing by 6.4 percent, compared to 2.2 percent in-store. AI is accelerating this shift, influencing an estimated $14.2 billion in global online Black Friday sales by helping shoppers compare prices and identify deals amid higher product costs and flatter discounting.
For commercial real estate, the downstream effects are apparent: Strong digital behavior continues to reinforce the need for omnichannel-optimized store fleets, while high-quality malls with compelling merchandise mixes remain the winners. Even as national foot traffic softened on Black Friday, top-tier centers posted year-over-year gains, underscoring that consumers will make the trip when the value proposition is correct. Retailers that strike a balance between convenience, curation, and price transparency will outperform in this environment.
Thomas LaSalvia, PhD, head of commercial real estate economics, Moody’s Analytics
The U.S. consumer remains resilient. Spending continues to drive GDP growth, and [it] has helped prevent a recession in 2025. Unfortunately, the situation is fragile, because nearly all of the increase in inflation-adjusted spending growth is concentrated in the top 20 percent of income earners—many of whom are supported by AI-related stock market gains.
This division and the fragility of the consumer household produce both direct and indirect concerns for commercial real estate. Directly, high-end retail and multifamily properties are able to endure during these uncertain economic times. Indirectly, awareness of this economic fragility has led to hesitation among commercial real estate tenants, investors, and lenders. Many are waiting for more clarity before taking the next steps, which has hindered overall market activity.
James Bohnaker, senior economist, Cushman & Wakefield
The health of U.S. consumers is difficult to assess in a uniform way, currently. The reality is that Americans’ experiences of the economy vary across income groups, homeowner status, age brackets, political views, and so on. Broadly speaking, what we are seeing is that wealthier households—those who have reaped the benefits of rising stock price and home equity gains in recent years—are feeling better about their financial situation at home and are still spending. That’s keeping [commercial real estate] activity relatively robust in consumer-driven sectors, such as retail, hospitality, industrial, apartments, et cetera.
[A] sizable portion of households, however, [is] feeling the impacts of inflation, reduced health care access, debt burdens, and a softer job market more acutely. They’re pulling back. But we’re at a point where everyone is looking for value, which is making real estate tenants and investors more deliberate in their decisions. We look for more of the same in 2026. As long as the job market remains resilient and inflation begins to trend downward—both features of our baseline outlook—the consumer environment will remain favorable for commercial real estate.
Victor Calanog, PhD, managing director and global co-head of research and strategy, real estate, Manulife Investment Management
There has been a curious mix of anxiety and resilience throughout the year, and that will likely hold true for consumer spending in the fourth quarter. Consumer confidence has been declining, reflecting anxiety over weakening labor markets and policy uncertainty in general; but U.S. retail sales are up 3.9 percent year-over-year, through September, and will likely be up between 4.5 percent and 5 percent, given holiday spending. That’s in line with the U.S. economy likely growing at around 2 percent—stronger than the 1.5 to 1.7 percent that was projected for 2025. There are many reasons to worry, but [they] hasn’t stopped the U.S. consumer from spending just yet.
For commercial real estate, it is a similar story. The industry seems worried about where interest rates and cap rates are going, given persistent volatility. And yet, transaction volume is up 17 percent year-over-year, through the third quarter, and financing appears available as the Mortgage Bankers Association estimates that commercial real estate loan originations will rise by 35 percent this year compared to 2024. Until there is real and measured weakness in the labor markets and the economy, it is likely that 2026 will be similar for commercial real estate—taking steps forward as we navigate high uncertainty.
Sam Chandan, PhD, director, Chao-Hon Chen Institute for Global Real Estate Finance at the New York University Stern School of Business
Consumer spending remains the economy’s primary engine, but holiday sales will provide less lift than headline figures suggest. While nominal retail sales will likely surpass a record $1 trillion, inflation-adjusted growth is projected at roughly 2 percent, with inflation accounting for half of reported increases. The number of items consumers are actually purchasing is declining, and growth is increasingly skewed toward affluent households.
This income concentration underscores a broader challenge as median and lower-income households have sharply curtailed spending expectations, reducing holiday budgets in many cases, compared to the prior year. Real disposable income growth has moderated to under 2 percent year-over-year, and persistent inflation on essentials is constraining . . . purchasing power. Credit conditions remain broadly stable, with credit card delinquency rates declining for five consecutive quarters, though elevated balances and rising consumer anxiety about debt management warrant monitoring, particularly as tariff-driven inflation continues.
For commercial real estate, retail fundamentals remain supported by tight supply and relatively low vacancy rates. However, strength is concentrated in prime locations and experiential categories. Dining, wellness, and entertainment tenants lead leasing activity. Secondary and tertiary markets face headwinds, with capital increasingly selective about tenant quality and location specificity. Success increasingly depends on right-sized formats and durable foot traffic metrics rather than broad market exposure.
Randall Sakamoto, managing director, Andersen
Especially during the holidays, I like to have hope for a great economy. And normally, I would say that record-breaking holiday sales give me hope for a strong economy that would carry into the new year.
The reality is [that] the preliminary sales figures this year are misleading. Most retailers report sales increases in dollars . . . not units. Prices of most goods are higher than last year, as we all know from trips to favorite retailers or online shopping. So, when retailers report greater sales, it really reflects higher prices and not more product sales, particularly for imported goods, which make up the bulk of the toy, electronic, and apparel categories.
We will not know to what degree for a few months, but it appears that unit sales in many categories will be lower than [in] 2024. Also, anecdotally, there are retailers offering discounts to attract shoppers that do not typically offer holiday sales, which underscores the challenges facing retailers this season.
The mixed retail activity is, in part, a result of the K-shaped economy. [That] means . . . some consumers feel positive, as they have seen substantial increases in wealth, including investment portfolios and retirement accounts. These consumers are spending on holiday purchases at or above the pace of last year. But middle- and lower-income households are severely strained. Credit card balances were on the rise before the holiday shopping season, and the number of delinquent consumer lending accounts increased in recent months. These households are spending less on holiday purchases and making hard choices to forego spending on other items and services.
Ultimately, consumer weakness is going to lead to issues for the retail and logistics real estate sectors. The combination of high labor costs and weaker than expected sales will lead to retail and restaurant closures in January and February. If there is no relief from high tariffs, a larger number of retailers may go dark. With fewer outlets to service, not to mention dealing with their own rising cost issues, warehousing and logistics space demand may weaken. Strained consumers may lead to less leisure travel, as well, weakening the hospitality sector. We may not see this [weakness] occur right away, but there is a growing risk of [it] in the first half of the year.
Ryan Severino, CFA, managing director, chief economist, head of research, BGO
Consumers continue to play an important role in the U.S. economy. Although much gets made of tepid consumer sentiment and confidence, outside of a recession, that doesn’t prevent people from spending money, and the same holds true now. Yes, some households are faring better than others, and inequality is widening, but those factors aren’t changing the overall landscape of consumption.
That consumption remains important, not just to the economy but [also] to the commercial real estate market. While most people think of consumers impacting retail and industrial most directly, virtually all property types have some sensitivity to consumer demand. When consumption is healthy, it can be a great supporter of commercial real estate performance—fundamentals and returns. But when the opposite is true, all property types tend to face challenges, though some more directly than others.
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