Cushman & Wakefield Releases Retail Market Report for Q3 2025

Cushman & Wakefield Releases Latest Retail Market Report

Cushman & Wakefield (C&W), a leading global real estate services company headquartered in Chicago, has published its latest retail market report for the third quarter of 2025. This report delves into the current economic landscape, rental market conditions, and consumer trends, providing valuable insights for investors, businesses, and consumers alike.

Economic Overview

The economic forecast for Q3 2025 anticipates a decline in the real GDP rate of approximately -3.9% compared to the previous quarter. This dip is largely attributed to a drop in exports following the implementation of export tariffs by the U.S. As for consumer price fluctuation, the core Consumer Price Index (CPI) in September 2025 showed a year-on-year increase of 2.9%, a slowdown from the peak of 3.5% recorded earlier in May.

Despite this decline in household income, which reported a slight decrease of 0.1% year-on-year, there are signs of improvement in consumer confidence. The Consumer Attitude Index has seen a gradual recovery over three consecutive months, albeit with a fair percentage of respondents anticipating price increases exceeding 5%.

Retail sales nationwide remained flat year-on-year in Q3, indicating a real decline. Among retail categories, drug stores demonstrated resilience with a 4.7% sales increase, continuing to lead the sector amidst a tougher economic backdrop. On the contrary, department stores struggled, showing a 1.4% decrease in sales, significantly influenced by yen appreciation and increasing prices of luxury goods affecting overall tax-exempt sales. However, since August, the decline in tax-exempt revenues has started to shrink, aided by a weaker yen, with luxury items like watches and jewelry experiencing relative sales stability, thereby mitigating the earlier sales decrease.

Rental Market Insights

In the tight rental market, prime areas have witnessed an upward trend in rental prices. Areas such as Shibuya (+20.0%), Shinsaibashi and Midosuji (+14.3%), Omotesando, Aoyama, and Harajuku (+12.5%), along with Ginza (+10.0%) have shown considerable rental increases. However, there is a noticeable downturn in demand from major luxury brands, indicating a shifting landscape in retail leasing.

Interestingly, some international brands, particularly in the athleisure sector, have increasingly accepted higher rental costs to maintain or enhance brand visibility. This trend stems from limited opportunities for opening new locations due to rising construction costs (approximately 34% increase from September 2019 to September 2025), impacting pre-constructed properties as well. Some negotiations for these prime locations are reportedly surpassing existing rental thresholds.

In Ginza, new store openings and lease renewals have started to take place above the established lower limits of prime area rentals, indicating continued expansion.

Outlook for the Future

As the dollar-yen exchange rate shifted approximately 4% towards yen depreciation since the average of Q3 2025 up to October 31, forecasts suggest a potential stabilization towards yen appreciation due to interest rate cuts from banks, including the Federal Reserve. This situation could limit the anticipated growth in tax-exempt sales. Nevertheless, with the stock market witnessing positive trends and rising asset prices, domestic consumer sentiment seems to improve gradually. The ongoing appreciation of the yen also fuels expectations of inflation moderation.

With limited opportunities for new leases in principal areas, existing upper rental prices are expected to persist above current market rates, especially concerning pre-constructed properties. Additionally, multiple redevelopment projects, such as those in Sakae, Nagoya, promise opportunities for the expansion of prime retail locations.

The full report can be accessed as a PDF for further details and insights.

About Cushman & Wakefield

Cushman & Wakefield (C&W) is one of the world's leading commercial real estate services firms, publicly traded on the New York Stock Exchange. With operations in over 60 countries and approximately 52,000 employees, C&W generated $9.4 billion in revenue across a range of core services including facilities management, transaction advisory, valuation, tenant representation, leasing, and project management in 2024. The firm's ethos of 'Better never settles' is reflected in its award-winning workplace culture, garnering widespread recognition within the industry and business community. For more information, visit Cushman & Wakefield's official website.