➤ Key Highlights
U.S. retail vacancy sits near a 20-year low, around 5.3–5.9%.
Unanchored strip centers hit a record-low ~4.8% availability.
CoStar sees 2026 net absorption averaging just 3.8M SF per quarter.
That is well below the prior five-year average of 9.8M SF per quarter.
Demand is led by medtail, fitness, chef-driven dining, and entertainment.
➤ The Signal
Tight retail is manufactured by under-building, not by surging demand.
Modest absorption still tightens a market with almost no new supply.
Pricing power has quietly shifted to landlords of well-located centers.
The instinct is to read record-low vacancy as a demand boom. The absorption numbers say otherwise: net demand is running at roughly a third of its recent norm. Both can be true because the supply side has been dormant for a decade — almost no new shopping centers have been built since the last cycle.
That scarcity is what’s tightening the market. Even soft demand fills space when nothing new is competing for tenants. The result is a landlord’s market created by years of capital discipline, not by consumers suddenly spending more.
The tenant mix has also changed underneath the headline. The demand that exists is experiential and service-driven — medical, fitness, food, entertainment — formats that draw traffic and resist e-commerce. Net-lease and sale-leaseback activity is rebuilding on that durability.
➤ Implications
Expect rent power for well-located strip and neighborhood centers and rising sale-leaseback volume as M&A returns. The risk is misreading scarcity as strength: weak-located commodity retail still struggles even at “low” national vacancy.
➤ Key Takeaway
Retail’s strength isn’t more shoppers — it’s fewer new boxes, and that’s a supply trade, not a demand one.
Source: CoStar / Cushman & Wakefield / ICSC — Q1–Q2 2026
