New York, July 15, 2026 – Cushman & Wakefield today released its Q2 2026 U.S. Retail MarketBeat, showing the nation's retail sector remained resilient during the second quarter as net absorption returned to positive territory, vacancy held near historic lows and limited new supply continued to support rent growth despite a more uncertain economic backdrop.
Retail net absorption totaled 708,000 square feet (sf) during the second quarter, recovering from the seasonal pullback recorded in Q1. National vacancy increased just three basis points quarter-over-quarter to 6.0%, remaining well below the historical average of 7.4% and positioning the sector for continued occupancy stability through the remainder of the year.
Historically limited construction activity continues to underpin market fundamentals. Asking rents increased 2.2% year-over-year to $25.65 per square foot (psf), while only 2.3 million square feet (msf) of new retail space was delivered nationally during the quarter. The active development pipeline now represents less than 0.3% of existing inventory, reinforcing the structural supply constraints that continue to support landlord pricing power.
"Consumer spending is becoming more selective, but that doesn't necessarily translate into weaker retail real estate performance," said James Bohnaker, Senior Economist at Cushman & Wakefield. "We're seeing demand concentrate around grocery, discount, health and wellness and other necessity-based concepts that continue to expand. Combined with an exceptionally limited construction pipeline, those trends should help keep vacancies relatively stable and support steady rent growth through the remainder of the year."
Consumer spending remained a stabilizing force during the quarter. Retail sales increased 6.9% year-over-year, or 5.4% excluding gasoline stations, while unemployment held near historic lows at 4.2%. Although inflation has begun to outpace wage growth and households continue to contend with higher living costs, spending has remained resilient, particularly among higher-income consumers. The top 20% of earners now account for nearly 60% of personal consumption outlays, contributing to stronger demand for grocery, discount, value-oriented and health and wellness retailers.
Regional performance was mixed. The West led the nation with 1.3 msf of positive net absorption and was the only region to record a decline in vacancy during the quarter, led by strong leasing activity in Las Vegas, the Inland Empire and Phoenix. The South posted the strongest annual rent growth at 3.3%, although vacancy edged higher across several high-growth markets as recently completed projects entered lease-up. Neighborhood and strip centers continued to dominate development activity, accounting for 82% of all retail deliveries during the quarter.
"Consumer spending is becoming more selective, but that doesn't necessarily translate into weaker retail real estate performance," Bohnaker said. "We're seeing demand concentrate around grocery, discount, health and wellness and other necessity-based concepts that continue to expand. Combined with an exceptionally limited construction pipeline, those trends should help keep vacancies relatively stable and support steady rent growth through the remainder of the year."
Looking ahead, retail fundamentals are expected to remain resilient as tenant demand continues to improve and new supply remains exceptionally limited. Planned store openings continue to exceed closures nationally, while landlords and retailers with strong balance sheets and operational flexibility are expected to remain best positioned as the market navigates a more uncertain economic environment.
