Salem’s retail market in 2024 saw a slowdown in leasing activity, with total square footage leased dropping by over 34% and the average lease size shrinking by nearly 18% compared to 2023. While Salem tenants averaged just 1,867 SF per lease, Olympia and Boise saw significantly larger transactions at 7,809 SF and 3,637 SF, respectively, underscoring the tight margins local retailers are navigating.
Despite sluggish leasing, retail rents in Salem rose 2.2% year-over-year, keeping pace with broader economic trends. However, weaker leasing activity in late 2024 suggests potential headwinds. Meanwhile, the retail sales market rebounded strongly, with 36 transactions totaling $38 million—up from 20 transactions and $26.7 million in 2023. Cap rates adjusted to a more buyer-friendly 7.8% as sellers aligned with current capital conditions.
Looking ahead to 2025, signs of stabilization are emerging. With federal monetary policy becoming more predictable and economic optimism growing, retail tenants are expected to expand, reversing the trend of shrinking lease footprints. Vacancy, currently at 3.6% (up from 2.4% last year), is anticipated to tighten again, especially with no major retail projects under construction. If conditions hold, Salem could see vacancy rates dip back into the low 2% range by next year.
While challenges remain, Salem’s retail market appears poised for renewed momentum in 2025, offering opportunities for both tenants and investors ready to adapt to an evolving landscape.
