US Real Estate Sector NAICS 531

Mar 23, 2026 - Services Sector Shakes Up Retail Space

• The Wall Street Journal reports that service-oriented tenants such as salons, spas, and fitness studios are reshaping retail leasing, accounting for just over 50% of leased space in 2025, up from 40% 15 years ago, according to CoStar. The shift reflects growing consumer spending on wellness and experiences, alongside ecommerce, which now represents 16.4% of retail sales and has reduced demand for traditional retail space. For the commercial property management industry, this transition is driving changes in tenant mix, space configuration, and revenue strategies. Property owners are subdividing larger spaces and attracting multiple service tenants, which can generate higher rents and increase foot traffic. Fitness and wellness users, including gyms, which accounted for nearly 30% of service leases last year, are also backfilling vacancies left by struggling retailers, helping keep retail vacancy rates low at about 4.4%.
• A growing number of homeowners are struggling to sell properties as high prices and elevated mortgage rates continue to dampen buyer demand, according to MarketWatch. The National Association of Realtors (NAR) reports that 2025 existing home sales fell to a 31-year low. In March, Google searches for “Can’t sell house” reached record highs, surpassing levels seen during the pandemic and the 2008 financial crisis. Homes are taking longer to sell, sitting an average of 8 days longer than a year ago, with well-priced homes going under contract in about 47 days and others lingering for up to 88 days, according to Redfin. Inventory is rising as new listings increased 4% in 2025, while buyers have not returned at the same pace, creating a 44% gap between sellers and buyers.

• A bipartisan Senate housing proposal aims to boost homeownership by requiring large single-family rental investors to sell newly built homes to individuals within seven years, a move that has drawn strong opposition from builders and investors, according to The Wall Street Journal. Industry groups warn that the provision could disrupt the build-to-rent model, reduce access to financing, and ultimately limit new housing construction, which analysts say could worsen affordability and push rents and home prices higher. Supporters argue the policy would increase homeownership opportunities and curb competition from institutional buyers, which accounted for more than 20% of home purchases in some markets during the pandemic. The measure is part of a broader housing package under consideration, though differences with a House version could delay passage. If enacted, the policy could significantly reshape investment strategies and housing supply across the residential market.
• A widening split in consumer spending is reshaping the grocery sector and driving new dynamics for the commercial property sector, as value-focused and premium grocers outperform traditional supermarkets, according to JLL. Discount chains such as Aldi and Grocery Outlet are expanding rapidly, while specialty grocers, including Trader Joe’s and Whole Foods, are seeing visits rise 10.4% and 9.8%, respectively. This bifurcation is boosting performance for grocery-anchored retail centers, which report vacancy rates of 4% compared with 6.3% for non-anchored properties, along with a 4.4% rent premium. For property managers, the strength and positioning of a grocery anchor are increasingly critical to tenant retention, leasing success, and overall asset value. Investor demand reflects this shift, with transaction volume for grocery-anchored centers rising 42% to nearly $11 billion in 2025 as capital targets stable, high-performing retail assets.