Retail fundamentals strengthened during the second quarter of 2026 as resilient consumer demand and historically limited new supply continued to support the market. While shoppers remained selective with discretionary spending, they continued to prioritize value, convenience, and experiences, helping retailers maintain healthy leasing activity despite ongoing economic uncertainty.

National retail vacancy held steady at 4.4% during the quarter, reflecting balanced market conditions and continued tenant demand. Open-air shopping centers remained the strongest-performing retail format, with vacancy holding steady at 5.5%, while mall vacancy improved 30 basis points quarter-over-quarter to 8.5%. Small-format space remains particularly constrained, reinforcing retailers’ competition for well-located storefronts.

Leasing activity accelerated meaningfully during the quarter as net absorption rebounded to 10.2 million square feet, reversing the softness seen earlier in the year. General Retail accounted for the largest share of demand with seven million square feet absorbed, followed by shopping centers (1.7 million SF) and malls (1.6 million SF). This broad category includes freestanding retail buildings and mixed-use developments such as restaurants, grocery stores, banks, pharmacies, auto dealerships, and standalone big-box retailers, highlighting continued demand for flexible retail formats and single-tenant assets.

Retail development remains historically constrained despite 56.1 million square feet currently under construction and 8.7 million square feet delivered during the quarter. Elevated construction costs and financing challenges continue to limit speculative development, keeping most new projects concentrated in build-to-suit, grocery-anchored, and small-format retail. Development activity also remains heavily concentrated in high-growth Sun Belt markets, led by Dallas-Fort Worth (7.7 million SF), Houston (4.3 million SF), and Austin (3.3 million SF).

Consumers also demonstrated remarkable resilience throughout the quarter. National retail foot traffic increased 2.6% year-over-year in April, 1.9% in May, and 2.0% in June, averaging 2.2% growth for the quarter. Value-oriented retailers continued to outperform, with discount & dollar stores posting visitation gains of 7.7% to 9.2%, while department stores and clothing retailers each recorded consistent traffic growth of 4% to 7%. Experiential retail also gained momentum heading into summer, with visitation to theaters & music venues surging 27.4% in June after declining in April. This resilience came despite higher fuel costs, as gasoline sales increased 21.2% year-over-year in April and 25.4% in May, suggesting consumers remained willing to spend while becoming increasingly selective about where they allocated discretionary dollars.

Average asking rents increased to $26.02 per square foot, up 0.5% during the quarter. While rent growth has moderated from the rapid gains seen following the pandemic, limited new supply, healthy leasing activity, and resilient consumer demand continue to support pricing across most retail formats. Looking ahead, constrained development, steady retailer expansion, and sustained demand for physical stores position the retail sector for continued stability through the remainder of 2026.

Download the U.S. Retail Market Statistics infographic here: 2Q26 Retail Stats