CoStar: Retail tenants continue filling existing space
Available retail space continued to get absorbed in the third quarter – especially in the Sun Belt.
Roughly 8.5 million more square feet was occupied nationally in the third quarter of 2026, according to new data from CoStar. This followed a gain of 10.3 million square feet in the previous quarter.
Tenants moved into nearly 96.7 million square feet of existing space during the quarter, which CoStar said is the highest total since mid-2022 and the second consecutive quarter above 96 million square feet. Move-outs eased to roughly 92.3 million square feet, down 7% year over year.
[READ MORE: CoStar: Asking retail rent growth slows in Q3]
At the end of the quarter, the national retail vacancy rate was around 4.4%.
“Recent occupancy gains have come almost entirely from tenants filling existing space,” said Brandon Svec, national director of retail analytics at CoStar Group. "Expanding retailers continue to absorb locations vacated by large chains, while the limited supply of available space has encouraged tenants to commit quickly when suitable sites become available.”
Among markets with at least 100 million square feet of retail inventory, Austin recorded net absorption over the past year equal to about 1.5% of inventory. It was followed by Phoenix (1.2%), Dallas-Fort Worth (0.9%), California’s Inland Empire region (0.7%) and Detroit (0.7%).
Columbus, Ohio, led the way in occupancy losses in the third quarter, with -0.4% of inventory hitting the market, followed by Washington, D.C., Kansas City and Miami.
Earlier this month, CoStar revealed that retail construction activity slowed in the third quarter as high costs continue to impact development. Roughly 58.3 million square feet of retail space was under construction in the U.S. in the period, down from 60.6 million square feet in the second quarter and 63.3 million square feet in the first quarter.
“Newly constructed space has played a smaller role in the absorption picture, with newly delivered buildings totaling about 12.3 million square feet – the smallest quarterly contribution since 2021,” added Svec.
CoStar’s full analysis can be found here.
