Is a Holiday Spending Slump About to Cripple U.S. Commercial Real Estate? Shocking Figures Inside!

The holiday shopping season of 2025 is expected to shatter records, with the National Retail Federation (NRF) projecting U.S. sales for November and December to rise between 3.7% and 4.2%. This growth is anticipated to push total holiday sales past the $1 trillion mark for the first time. However, a closer look at consumer sentiment reveals a more complex picture, hinting at potential challenges ahead.

As we approach the festive season, consumers exhibit a mixed bag of emotions. While there is optimism about sales growth, many shoppers display signs of anxiety, primarily due to inflation's persistent grip on the economy. Nicole Larson, the national research manager for retail services at Colliers, notes that consumer spending remains resilient, with retail holiday sales expected to increase by approximately 3.1%. This represents solid growth, albeit softer than the decade average when inflation is factored in. Larson highlights that spending behavior is increasingly value-driven, with consumers being more selective about gifts and prioritizing personal and milestone occasions. Events like Black Friday and Cyber Days are projected to see sales growth of 3.09% and 6.37% respectively, fueled by deep discounts that attract bargain hunters.

Online shopping is set to be the dominant driver of this growth, with expected sales increases of 6.4% compared to just 2.2% for in-store purchases. The rise of artificial intelligence is influencing consumer behavior, enabling shoppers to compare prices and identify deals more effectively, which is expected to stimulate an estimated $14.2 billion in global online Black Friday sales.

Yet, the commercial real estate sector is observing some downstream impacts of these trends. Larson points out that strong digital habits reinforce the need for omnichannel-optimized store fleets. While national foot traffic may have softened on Black Friday, high-quality malls with a compelling merchandise mix continue to draw shoppers, highlighting how the perceived value can drive footfall.

Dr. Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics, remarks on consumer resilience, noting that spending is crucial for GDP growth and has helped stave off a recession in 2025. However, he cautions that this resilience is fragile and concentrated predominantly among the top 20% of income earners, many of whom benefit from gains in AI-driven stock markets. This economic division raises concerns about commercial real estate, as uncertainty among investors and tenants may limit market activity.

Echoing LaSalvia's sentiments, James Bohnaker, a senior economist at Cushman & Wakefield, highlights the varied experiences of consumers. Wealthier households, buoyed by rising stock prices and home equity, are more confident and continue to spend, bolstering activity in sectors like retail and hospitality. Conversely, lower-income households feel the brunt of inflation, reduced access to healthcare, and rising debt burdens, causing them to pull back on spending. Bohnaker notes that this disparity in consumer sentiment leads to more deliberate decisions from real estate tenants and investors.

Examining the broader economic landscape, Victor Calanog, PhD, managing director and global co-head of research and strategy at Manulife Investment Management, acknowledges a mix of anxiety and resilience among consumers. Despite declining consumer confidence due to labor market concerns and policy uncertainty, retail sales have risen by 3.9% year-over-year through September and are projected to continue their upward trend during the holiday season.

Meanwhile, Dr. Sam Chandan, director of the Chao-Hon Chen Institute for Global Real Estate Finance at NYU Stern School of Business, emphasizes that while nominal retail sales may surpass $1 trillion, inflation-adjusted growth is expected to hover around 2%. This suggests that the number of items purchased is declining, with growth increasingly skewed towards affluent households. He warns that median and lower-income households are pulling back on their holiday budgets compared to last year, highlighting a wider economic challenge.

Randall Sakamoto, managing director at Andersen, expresses concerns that preliminary sales figures may be misleading, indicating that higher prices, rather than increased unit sales, are driving reported growth. He emphasizes that many retailers are resorting to discounts to attract shoppers, which highlights the challenges they face. This dynamic stems from a K-shaped economy, where affluent consumers who have seen wealth increases continue to spend, while middle- and lower-income households struggle and make tough spending choices.

Ryan Severino, chief economist at BGO, adds that despite varying consumer experiences, the importance of consumer spending to the overall economy and commercial real estate remains significant. He notes that while some households are better off, the overall landscape of consumption is still robust, emphasizing the interconnectedness of consumer health and commercial real estate performance.

As the holiday season unfolds, the resilience of U.S. consumers will be put to the test. While positive projections exist, the underlying economic fragility and disparities among income groups could shape the retail landscape and impact commercial real estate dynamics well into 2026. Shoppers will remain vigilant, prioritizing value, and retailers will need to adapt swiftly to maintain their footing in this evolving marketplace.