Macro-Level Obstacles May Offer Advantages for This High-Demand Sector

A newly constructed Publix supermarket in Wesley Chapel, Florida, wrapped up in 2024, exemplifies Tampa Bay’s ongoing retail expansion. Despite potential headwinds, the region’s retail market has entered 2025 on a solid footing, with strong leasing activity and historically low vacancy rates.

Record-Breaking 2024 Sets the Stage

Tampa Bay emerged as Florida’s top retail destination in 2024, tallying approximately 2.9 million square feet of leasing activity. Net absorption exceeded 1 million square feet, marking a jump of over 600,000 square feet compared to 2023. At the same time, retail availability stands at a near-record low of 3.5%. These factors underscore the sector’s resilience as the new year unfolds.

Yet, some challenges loom. According to Justin Greider, senior vice president and Florida retail lead for JLL, upcoming retail bankruptcies and closures nationwide could lead to vacant spaces hitting the market in 2025. Greider sees this as a chance for landlords, especially those with well-positioned properties, to bolster rental rates and upgrade their tenant mixes.

Closures and Opportunities

Several prominent retailers, including Big Lots, Walgreens, and Party City, shuttered Tampa Bay locations in 2024. More recently, Macy’s announced plans to close its store in Washing Property Group’s Westshore Plaza after selling its anchor spot for $10 million late last year. While closures signal caution, they also free up real estate for other tenants eager to establish or expand in a market where available space is scarce.

Demand remains robust across multiple segments. “For larger spaces, grocery chains, value-focused retailers, and fitness centers are the big players,” says Greider. Brands such as Aldi, Ross, and LA Fitness continue to scout sites throughout the Tampa Bay region. In fact, Aldi recently transformed a former Barnes & Noble location on Dale Mabry Highway into a new grocery store, while EoS Fitness signed a 40,000-square-foot prelease—one of the largest new deals of 2024.

Smaller retail footprints also remain in high demand, particularly in food and beverage. From smoothie bars and acai bowl shops to chef-driven concepts, restaurateurs are willing to pay premium rents for prime space. “We’ve noticed that smaller tenants will reduce their square footage if it means securing the exact location they want,” Greider explains.

Constraints on New Construction

Although retail demand is soaring, new development has slowed considerably. With just 315,000 square feet under construction—the smallest pipeline in a decade—retail availability may tighten further. Greider cites high land and construction costs, along with protracted permit and entitlement processes, as key hurdles for traditional retail developers.

Still, a variety of redevelopment projects and mixed-use ventures are slated for 2025, potentially easing space constraints while offering fresh opportunities for retailers. This development, coupled with strong leasing activity, is poised to drive positive net absorption and keep vacancy rates near historic lows.

As 2025 progresses, both landlords and tenants in Tampa Bay’s retail market stand to benefit. While macroeconomic uncertainties could introduce new challenges, they also open the door for creative repositioning, allowing the region to maintain its reputation as one of Florida’s premier retail destinations.