Retail Rent Trends Cool as the Midwest Bucks the Slowdown

Retail Rent Growth Cools

Retail rent trends in the US continued to shift as growth decelerated during the first quarter of 2026, according to CSA. CoStar Group data shows retail asking rent growth dropped to 1.9% year over year, marking a steady decline from the post-pandemic surge. The slowdown was widespread, though Sunbelt cities including Phoenix, Orlando, Atlanta, and Charlotte reported moderate gains as rents plateaued.

Construction Activity Declines

Retail development activity also softened. Roughly 64.2M SF of retail space was under construction nationally in Q1 2026, down from about 70M SF a year ago and well under the 10-year average, which topped 90M SF. This reflects a cautious approach from developers amid changing market conditions, as capital deployment becomes more selective and competition for deals tightens across asset classes.

Demand Normalizes

CoStar analysts note that current retail rent trends are less a sign of weak demand and more a product of normalization. After rapid post-pandemic growth, retail sector fundamentals remain sound but are adjusting as sales growth and occupancy costs return to historical norms. Tenants have become less receptive to rent hikes, especially where operating costs and interest rates are high.

Regional Standouts

While many markets saw rent growth slow, several Midwestern cities outperformed the national average. Minneapolis recorded the highest annual rent gains at 6.9%, with Columbus at 6.3% and St. Louis at 4.1%. These regions remain relatively resilient compared to most Sunbelt markets as 2026 progresses.