CoStar: Retail rent growth slows to 1.6% in Q2
Retail asking rent growth is continuing to slow down despite still being at recent highs.
In the second quarter of 2026, national asking rent growth decelerated to 1.6% year over year – the slowest pace in more than a decade – according to data from CoStar Group, a leading global provider of online real estate marketplaces, information and analytics. In the first quarter, rent growth slowed to 1.9% year over year.
CoStar’s data found that the current market asking rent per square foot stands at about $22.00.
“The slowdown in asking rent growth is less a sign of weakening demand than a function of normalization,” said Brandon Svec, national director of retail analytics at CoStar Group. "While retail fundamentals remain healthy by historical standards, softer consumer spending growth, elevated interest rates and greater tenant cost pressures have reduced landlords’ ability to push rents at the aggressive pace seen earlier in the cycle.”
Several Sun Belt markets that led rent growth earlier in the cycle, including Phoenix, Orlando, Atlanta, Charlotte and Las Vegas, remain among the stronger performers nationally, posting annual rent growth between roughly 3% and 6%, though CoStar says many of these markets have seen moderating rent gains.
[READ MORE: Study: Retail property sale price per square foot increased 15% in June]
“While rent spreads have moderated somewhat from the record levels achieved in 2022 through 2024, they remain near multi-decade highs in many markets as rents on expiring leases often sit well below current market rates,” said Svec. “The combination of elevated lease spreads and larger contractual rent escalations is allowing many owners to continue generating meaningful revenue growth even as rent appreciation slows.”
Earlier this week, CoStar released a report that revealed that in the second quarter of 2026, roughly 72.1 million square feet of retail space was under construction in the United States, up 0.9% year over year and below the 10-year average of roughly 78.9 million square feet.
New retail construction remains heavily concentrated in 15 markets, which account for nearly 47% of the national pipeline. Among those markets, Dallas, Houston and Austin collectively comprise 21% of the U.S. pipeline (or 15 million square feet).
