Retail Construction Slows Nationwide in 2026

Limited New Supply

The Commercial Observer reports that retail construction is slowing significantly in the US, with just 64.2M SF underway in Q1 2026, per CoStar Group data. This marks an 8% decline from 2025 and falls far short of the 10-year average of 90M SF. Industry experts point to rising land prices, higher construction costs, and elevated interest rates as key headwinds for retail construction.

Regional Activity Varies

Retail construction in Dallas, Houston, and Austin outpaced other US markets, with nearly all new projects pre-leased. Miami and Detroit reported the lowest major market pipelines, highlighting wide geographic variation. This uneven pipeline comes as developers in key Sun Belt metros also navigate strong apartment demand alongside slowing supply growth, reinforcing how capital is being selectively deployed across asset classes. Strong demand from residential, industrial, and mixed-use projects increases competition for viable sites, especially in urban and infill locations.

Economic Climate Pressures

Retailers are adopting cautious, capital-disciplined expansion strategies in response to ongoing consumer uncertainty and supply risks. Lingering concerns include potential impacts from global tensions, fluctuating fuel prices, and new rounds of import tariffs. Most industry stakeholders express a preference for smaller retail footprints and selective growth amid a challenging economic and geopolitical environment.