Strong Demand Strengthens Retail Real Estate Market
Source: CBRE Research, Q3 2026.
Retail Demand Stays Positive for Fifth Consecutive Quarter
Retail net absorption totaling 9.6 million sq. ft. in Q3 marked the fifth consecutive quarter of positive demand and the highest quarterly total since Q4 2025. Neighborhood, community & strip centers led all property types with 2.4 million sq. ft. of absorption, while Dallas led all markets with 924,000 sq. ft. Occupiers remained focused on new supply amid an ongoing flight to quality.
Retail Availability Decreases to 4.8%
Source: CBRE Econometric Advisors, Q3 2026.
Retail availability decreased slightly to 4.8% in Q3 and has hovered between 4.7% and 4.9% since Q4 2022. The lifestyle & malls segment led all property types with a 40-bp drop as many retailers continued to seek Class A mall space. The downtown availability rate remained 118 bps lower than the suburban rate. Availability fell in both downtowns and the suburbs.
Construction Completions Fall to New Quarterly Low
Source: CBRE Econometric Advisors, Q3 2026.
Retail construction completions fell to a quarterly low of 5.5 million sq. ft., while the rolling four-quarter total also hit a record low of 7.4 million sq. ft. Rising construction costs and a labor shortage continued to limit deliveries. Southern markets accounted for eight of the top 10 spots for completions, led by Dallas with 993,000 sq. ft.
Retail Rents Rise 2.5% Year-Over-Year
The average retail asking rent rose by 2.5% year-over-year to $24.89 per sq. ft. in Q3. Consistently low availability drove the increase, driven by historically low new construction and five consecutive quarters of positive net absorption. Rents rose in line with the 10-year average and the growth rate was tempered by significant availability in less expensive secondary space.
Retail Investment Volume Drops
Retail investment volume fell by 6% year-over-year in Q3 to $16.8 billion due in part to pricing fluctuations at the asset level. The dip follows a sharp 2025 rebound, when Q3 volume rose by 41% year-over-year. Total annual retail investment volume this year is expected to increase by 8% to $79.1 billion based on continued strong retail fundamentals. The average retail loan to-value (LTV) ratio fell by 60 bps year-over-year in Q3 to 58.2%.
Top Retail Markets for Availability, Net Absorption & Construction Completions
Source: CBRE Econometric Advisors, Q3 2026.
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