As commercial real estate strategists, keeping a pulse on the shifting dynamics of the retail sector is critical for advising clients effectively. Juan Arias, National Director of U.S. Industrial Analytics at CoStar Group, joined our recent 2026 Economic Outlook to provide a data-driven breakdown of the retail landscape for the year ahead.
Based on his analysis, here are the five key retail trends that every broker should be tracking in 2026.
1. Historic Low Vacancy Driven by Limited Supply
The retail sector is currently standing out as one of the healthiest property types, primarily due to a lack of new construction. Arias noted that deliveries have been “very, very limited relative to the pre-pandemic average,” which has kept supply and demand in tight alignment.
As a result, vacancy rates are holding steady at historically low levels of around 4% and are expected to remain tight going forward. For brokers, this means landlord leverage remains strong in many submarkets, as very limited inventory growth continues to be a major tailwind for the sector.
2. A Shift to Net Positive Store Openings
After years of headlines dominated by the “retail apocalypse,” the narrative has flipped. Arias highlighted a significant turning point in the market: “We’re finally seeing more announced store openings versus announced retail store closings.”
This shift signals renewed confidence from retailers and a stabilization of the tenant base, providing a positive tailwind for demand that brokers can leverage when discussing market sentiment with potential investors.
3. Large-Format Volatility Due to Bankruptcies
While the overall market is healthy, specific segments are facing headwinds. The rise in availability has been mostly concentrated in the large format retail space, specifically spaces above 10,000 square feet.
Arias attributed this to recent bankruptcies from major players like Big Lots, Party City, and Macy’s, who have begun shedding space. This trend has created pockets of softness in the big-box sector, making these assets more challenging to lease compared to their smaller counterparts.
4. Small-Format and Grocery-Anchored Assets Are Thriving
In contrast to the large-format struggles, small retail spaces are experiencing a boom. Arias emphasized that grocery-anchored, strip retail has been performing really well.
Availability for spaces under 5,000 square feet is exceptionally tight. As fellow presenter and eXp Commercial’s Director of Brokerage Operations John LeTourneau pointed out during the session, “This is a huge huge bellwether for those small-size retails, where the biggest unit is 5,000 ft and under. You should make [your clients] aware of this as far as rent setting, concessions, lease terms, and things like that. These folks are living very, very well right now.” For brokers, this is a key area to target, as demand for service-oriented tenants in neighborhood centers remains robust.
5. Leasing Velocity is Accelerating
The strong demand and limited supply are translating into faster deal cycles. Arias noted that the time to lease retail space has dropped significantly, currently averaging around 7 months — well below the historical average of around 10 months to lease.
This increased velocity is a critical data point for managing client expectations. Spaces are moving faster than historical norms, meaning tenants need to act decisively, and landlords can push for more favorable terms in this competitive environment.
Ready for more data? Click here to read our forecast on the 5 biggest trends in office for 2026.
This article is provided for general informational purposes only and does not constitute investment, legal, tax, or financial advice, nor a solicitation to buy or sell any security or real estate interest. Readers should consult their own professional advisors before making any investment or business decisions. Market data provided by CoStar Group.The views expressed reflect individual market perspectives and do not represent investment recommendations or company forecasts. Certain statements may be forward-looking in nature and are based on current expectations, which are subject to change due to economic and market conditions.