CBRE: Retail real estate set for continued growth; new builds remain slow
Despite an inflation rate remaining above 4% that will render Federal Funds Rate cuts unlikely for the rest of the year, continued consumer spending has kept commercial real estate resilient, reports CBRE in its 2026 Midyear Review.
“The U.S. real estate market has withstood economic and geopolitical headwinds this year and is well positioned for further growth,” said Henry Chin, CBRE’s global head of research. “We’re seeing strong sectors like data centers and retail continue their momentum. Most sectors should benefit as geopolitical issues abate.”
CBRE expects that availability rate for retail space — which includes vacant space as well as occupied space being marketed for use by new tenants — will continue declining from 4.9% in the second quarter as new construction remains constrained.
Retail sectors that will continue to clamor for more space will be led by supermarket chains, discounters, service retailers, and fast-casual and quick-service restaurants.
Expanding brands increasingly favor new construction, with markets such as Dallas, Phoenix and Houston leading net absorption. Southern markets will continue to absorb the bulk of retail expansion, according to CBRE.
Pace of new builds remains slow
Construction of new retail space in the last four quarters remained dismally low, producing just 11 million square feet compared to an historical average of around 18 million square feet.
CBRE’s report forecasted a five-year nominal compound annual growth rate increase to 1.7% at midyear, compared to 1.5% in January. The most robust rent growth will occur in supply-constrained coastal cities, much of it fueled by well-located open-air and grocery-anchored centers.
Consumer spending, nonetheless, remains resilient with overall retail sales increasing by 6.7% year over year in June 2026 according to the U.S. Census Bureau.
Markets like Manhattan (+4.5%), Stamford (+3.6%), Long Island (+3.5%) and Westchester County, N.Y. (+3.2%) are showing the strongest rent growth in CBRE’s forecast, as the dearth of available space contributes to pricing leverage for owners.
While Sun Belt markets are drawing the most leasing activity from retailers, rent growth in these locations is already at or near its peak, according to CBRE.
Hotels will continue to be showing up in larger mixed-use and open-air centers, said the report.
The global real estate services company forecasts that the revenue per available room will increase by 2.5% for hotels, up from an earlier forecast of 1.2--due to increased domestic business and leisure travel. Occupancy rates will rise higher than 60% and room rates will increase by nearly 2% by the end of this year, according to CBRE.
