CoStar: Commercial real estate market to remain 'balanced' despite global pressures
Retail real estate fundamentals are expected to remain steady for the foreseeable future.
A new forecast from commercial real estate analytics firm CoStar reveals that national retail vacancy is anticipated to remain at current levels through 2027 before rising minimally over the medium term. CoStar added rent growth is expected to “strengthen modestly” as limited new construction and healthy tenant demand continue to support occupancy.
CoStar’s data puts the vacancy rate just under 4.5% at the midway point of 2026, with a projection of it remaining flat until 20230 while net deliveries and net absorptions fluctuate slightly over the forecast period.
“The updated forecast reflects stronger-than-anticipated demand earlier this year,” said Brandon Svec, national director of retail analytics at CoStar Group. "Store openings continue to outpace closures, known closure announcements have fallen to their lowest level in several quarters, and retailers have continued to backfill vacant space more quickly than expected. In addition, the pipeline of announced, but not yet opened, stores remains elevated, providing a continued source of future demand over the next two to three years.”
Svec added that global economic headwinds, impacted by rising energy prices, tariffs and more, could reduce retail sales growth and slow tenant expansion plans over the forecast period.
[READ MORE: CBRE: Retail real estate set for continued growth; new builds remain slow]
“Although the forecast has improved, risks remain tilted modestly to the downside,” he added. “Higher energy prices resulting from geopolitical conflict involving Iran could weigh on consumer spending and retailer profitability. Additional risks include renewed tariff uncertainty, further labor market deterioration leading to slower wage growth, and weaker population gains due to tighter immigration policies.”
CoStar’s full forecast can be found here.
