The Worst Time to Build Retail Is Becoming the Best Time to Own It

Nobody is building new retail right now — and the landlords who already own it are starting to realize that might be the best thing that's happened to them in years.

Jordan B.
April 09, 2026

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Good morning. Retail construction just hit its lowest level in a decade, and with costs too high to justify new development in most markets, the supply drought that's been building for years is showing no signs of letting up.

Today’s issue is sponsored by InvestNext—see how 52TEN created a user-friendly investor experience for their LPs while enhancing operational efficiency.

With over 100M SF in shopping centers and mixed-use assets, Kimco Realty Corporation continues to be the biggest grocery-anchored landlord in America.

Ross Cooper joins Jack Stone and Alexander B. Gornik to pull back the curtain on how Kimco Realty builds long-term relationships with the biggest grocers.

CRE Trivia 🧠

What is the largest shopping mall in the United States by total retail space?

(Answer at the bottom of the newsletter)

Market Snapshot

S&P 500

GSPC

6,782.81

Pct Chg:
+2.511%

FTSE NAREIT

FNER

803.43

Pct Chg:
+1.28%

10Y Treasury

TNX

4.295%

Pct Chg:
-0.023

SOFR

30-DAY AVERAGE

3.65%

Pct Chg:
-0.00

*Data as of 4/8/2026 market close.

Nobody Is Building

Retail Construction Hits Multi-Year Low as Development Math Breaks Down

New retail space was already hard to find. It's about to get harder.

The numbers: Only 64.2 million square feet of retail space was under construction nationally in Q1 2026 — down 8% from 70 million SF a year ago and well below the 10-year average of 90 million SF, according to CoStar. For context, certain periods in 2016 and 2017 saw 120 million SF under construction. The pipeline has been cut nearly in half.

Why developers aren't building: The math simply doesn't work in most markets. Land costs, construction costs, and interest rates have pushed the rents required to justify new ground-up development well above what tenants are willing to pay. "Even in markets with strong population growth and leasing demand, achieving returns that justify ground-up construction has become increasingly challenging," said CoStar's national director of retail analytics Brandon Svec.

Where construction is still happening: Texas is carrying the country. Dallas led the nation with nearly 7 million SF under construction in Q1, followed by Houston at just under 4 million SF and Austin at just over 3 million SF — with the majority of that pipeline pre-leased. Miami, by contrast, had less than 1 million SF underway.

The macro headwinds aren't helping: Tariffs, Iran-driven fuel price spikes, and a cautious consumer are layering on top of an already difficult development environment. The two-week ceasefire announced Tuesday may offer some relief at the pump, but with Tehran still controlling the Strait of Hormuz and 10% import tariffs still in place — and facing legal challenges from 21 states — uncertainty isn't going anywhere fast.

➥ THE TAKEAWAY

The bigger picture: Retail's supply problem is quietly becoming its best feature. With construction running 30% below the 10-year average and new development nearly impossible to pencil, landlords sitting on well-located existing retail are in a stronger position than the headlines suggest — whether they planned it that way or not.

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✍️ Editor’s Picks

Banking boom: Charlotte’s financial sector is driving sustained growth, with the metro adding 20,000+ finance jobs since 2015, reinforcing its status as a top U.S. banking hub.
Pretend or Perform? The "Extend and Pretend" era is over. Learn how to shift to active performance management to protect your 2026 yield and maximize net operating income. (sponsored)
Distress uptick: CMBS special servicing climbed to 11.0% in March, up from 10.73% in February, as office and multifamily loans continue to drive distress.
Lack of data: Roughly 80% of CRE and workplace executives say they lack the data needed to reduce office costs, highlighting a major operational blind spot.
REIT shift: Public REITs are undergoing a structural transformation as capital flows toward specialized sectors like data centers and logistics, reshaping portfolio strategies.
Inflection point: Market trends suggest the self-storage industry might be at a turning point in 2026. Download the State of the Market Report from White Label Storage to learn why. (sponsored)
Chrysler battle: Tishman Speyer is moving closer to reclaiming the Chrysler Building after default, with the iconic tower tied to $800M+ in debt.
Nashville rebound: Investment activity is rebounding in Nashville, but new development is slowing as rising costs and tighter financing limit supply growth.

🏘️ MULTIFAMILY

AI rents: San Francisco posted the nation’s strongest rent growth, with annual gains of just +0.4% in March, as AI hiring fuels demand despite a broader slowdown.
Delinquency rise: Multifamily CMBS delinquencies climbed to 7.15% in March, up from 5.44% a year ago, with nearly 80% of new distress concentrated in NY/NJ and Houston.
Construction loan: Affinius Capital secured $144M in construction financing for a 408-unit Santa Ana multifamily project, signaling sustained lender confidence in Orange County despite a competitive development pipeline.
LA development: Terra Capital is expanding its Westside footprint with a new eight-story, 44-unit multifamily project in Pico-Robertson, leveraging density incentives to add affordable housing while replacing smaller existing properties.
Senior housing: Welltower paid $87M for a Palm Beach County assisted living facility, marking a 36% value jump in two years as institutional capital doubles down on senior housing despite mixed sector performance.

🏭 Industrial

Hot spot: Neocloud providers are scaling rapidly, with revenues growing at roughly 80%+ annually since 2021, fueled by surging demand for GPU-powered AI infrastructure.
JV kickoff: Basis and OneIM seeded a new industrial venture with a $145M acquisition, signaling continued institutional appetite for logistics assets despite market uncertainty.
Baltimore buy: Mid Atlantic Port Services acquired a 30K SF warehouse for $5.7M, highlighting strong demand for infill industrial near major transport routes.

🏬 RETAIL

Buying spree: Bed Bath & Beyond is acquiring The Container Store for $150M, adding 100+ stores and 2.2M SF of retail space to rebuild its physical footprint.
Portfolio buy: Medipower acquired a 560K SF, 7-property retail portfolio that’s 99% occupied, expanding its grocery-anchored footprint across the East Coast.
Coral leases: A $56M leasing wave across Coral Gables’ Miracle Mile highlights growing tenant demand for lower-cost, amenity-rich suburban office and retail space as firms migrate from pricier urban cores.
South Florida trade: Nuveen acquired a Broward County retail center for $46M, reinforcing institutional demand for stabilized retail in high-growth Florida markets.

🏢 OFFICE

Leasing rebound: Office recovery is gaining traction in key markets, with top-performing cities seeing availability improve by up to 4 percentage points year-over-year as demand stabilizes.
AI expansion: Anthropic now leases roughly 1M SF in San Francisco, underscoring how AI firms are driving a disproportionate share of new office demand.
Houston sale: Equus Capital sold a Houston office asset, marking continued transactional activity as investors selectively re-enter the office market.
Leasing surge: Manhattan recorded 9M SF of leasing in Q1, with large deals concentrated in trophy assets as the market continues to bifurcate.

🏨 HOSPITALITY

Hotel financing: TMGOC Ventures secured $104.5M in construction financing to convert two office buildings into a 168-key, 190K SF Ritz-Carlton in Savannah’s historic district.
Luxury portfolio: Domes Resorts acquired Goldman Sachs’ majority stake in the 11-property Casa Cook and Cook’s Club portfolio, expanding its footprint across high-end European resort markets.
Savannah build: Developers landed another $104.5M loan for the Ritz-Carlton Savannah, reinforcing strong lender appetite for luxury hospitality in supply-constrained markets.

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📈 CHART OF THE DAY

CRE Trivia (Answer)🧠

American Dream in East Rutherford, New Jersey — which spans approximately 3 million square feet of retail and entertainment space. It surpassed the Mall of America in Minnesota, which held the title for decades, upon its completion. American Dream is notable for including an indoor ski slope, water park, and ice rink alongside its retail tenants.