CoStar: U.S. retail vacancy expected to rise ‘minimally’ in first half of 2026
Though receding, store closures are expected to increase in the first half of 2026 as the bifurcated retail sales environment pushes certain tenants to trim locations.
That’s according to the new forecast from commercial real estate data firm CoStar, which said that U.S. retail vacancy is expected to rise minimally in the first half of 2026 before falling slightly during the latter half of the year and into 2027. The outlook is consistent with CoStar’s previous forecast, which had U.S. retail vacancy peaking at just under 4.4%.
[READ MORE: Retail vacancy rates to rise in first half of 2026]
Full-year net absorption is forecasted to total just over 16 million square feet, which would be the third lowest level of annual demand formation recorded in the past decade, behind 2020 and 2025.
“Underpinning the stable outlook was the resumption of positive demand in the back half of 2025,” said Brandon Svec, national director of retail analytics at CoStar Group. "After two consecutive quarters of falling demand, retail fundamentals stabilized in the third quarter as the pace of closures slowed and backfill demand surged. With higher demand, the wave of store closures seemingly cresting, and new supply remaining elusive, performance is forecasted to remain in balance for the foreseeable future.”
Svec added that there are both upside and downside risks to the forecast. But the balance currently tilts to the downside.
“Continued uncertainty persists around the impact of tariffs, and although retailers and suppliers have largely absorbed these costs so far, many are signaling imminent price increases, which could further strain household budgets and dampen discretionary spending,” he said.
CoStar is a leading global provider of commercial real estate data, analytics and news. It is part of CoStar Group, a leader in commercial real estate information, analytics, online marketplaces and 3D digital twin technology.
