The US retail real estate market started 2026 with an unusual mix: negative net absorption alongside record-high investment volume. As national chains consolidate their store networks and availability remains at historic lows, transaction prices per square foot reached an all-time high. Q1 2026 shows a market in transition — between cleansing and revaluation. Newmark has summarised the key developments in its latest U.S. Retail Market Report. A perspective from retail real estate advisory.
Negative absorption but no weakness: why store closures are not tipping the market
Net absorption fell in Q1 2026 to minus 3.6 million square feet — a break after two positive quarters. The reason lies less in structural market weakness than in deliberate portfolio cleansing by national chains. Large multiples are closing underperforming stores to increase floor productivity.
At the same time, total availability held nearly unchanged at 5.3 per cent — 120 basis points below the long-term average of 6.5 per cent. The main reason: almost no new retail floor is coming to the market. The new-build pipeline is essentially empty. Most REITs and owners report that the large closure wave from early 2025 is largely complete, with individual laggards expected through the end of 2026 (Source: Newmark, 1Q26 Report).
The K-shaped split: Class A benefits, Class B remains under pressure
The market split is particularly evident in the mall segment. In Class A malls, move-outs exceeded arrivals — at first glance a warning sign. In reality, prime space in these centres is often let years in advance and never appears on the open market. The asking rent for Class A malls stands at USD 21.86 per square foot (NNN), although nominally down 9.1 per cent year-on-year.
Class B malls, by contrast, recorded positive absorption — but at a rent of only USD 13.47 per square foot. Rents here rose 7.9 per cent year-on-year, mainly reflecting the quality of the space actually available: in B malls there is simply more choice (Source: CoStar via Newmark).
Power centres lost 3.1 million square feet — the largest decline of all formats. Freestanding assets remained the only format in positive territory with 0.4 million square feet of net absorption.
Retail sales surprise — but drivers are fragile
In March 2026, US retail sales rose 1.7 per cent month-on-month — the strongest monthly gain since June 2023. Year-on-year, the increase was 4.1 per cent. The development was driven largely by rising gasoline prices (plus 15.5 per cent month-on-month) and above-average tax refunds (plus 11.1 per cent versus 2025).
Looking more closely at categories, the picture becomes differentiated: Clothing and Accessories grew 7.2 per cent year-on-year, Nonstore Retail 10.1 per cent. At the same time, growth in Food Services is slowing — consumers are shifting spending from restaurants to home-based groceries. Grocery Stores overtook Food Services in monthly growth for the first time in a while.
Consumer behaviour and interest rates: the second look
Behind the positive sales figures, a more differentiated picture emerges. University of Michigan consumer sentiment sits about 20 per cent below the previous year in early 2026. Credit-card-based spending shows a growing two-class structure: high-income households continue to consume robustly, while low-income households visibly cut spending. Current credit-card debt reached a historic high of around USD 1.2 trillion, delinquencies on instalment loans and credit cards have been rising for six consecutive quarters (Source: Federal Reserve Bank of New York).
The interest-rate environment reinforces this split. The US Federal Reserve has moderately lowered the key rate over the past quarters, but the rate level remains clearly above the pre-pandemic level. For retail real estate buyers, this means persistently high refinancing costs – that the retail investment market nonetheless reports record volumes underlines the exceptional demand for an asset class considered cycle-resilient and offering stable cash flows. For retailers, the interest and credit conditions mean more selective expansion behaviour – only genuinely profitable locations are pursued.
Investment market at record levels: USD 19 billion in Q1
While letting markets sort themselves out, the investment market runs at full speed. Transaction volume in the first quarter of 2026 reached USD 19.0 billion — the highest Q1 result of the past ten years. 2025 already, at USD 72 billion, was the third-strongest year of the decade.
The average cap rate across all retail transactions stood at 6.70 per cent, down 27 basis points year-on-year. Retail is thus the only commercial asset class for which further cap rate compression is forecast in 2026. Price per square foot reached USD 275, an all-time high — 20.5 per cent above the previous year and 11 per cent above the previous record from 2015 (Source: MSCI Real Capital Analytics via Newmark).
High-profile street retail transactions on Newbury Street in Boston and Lincoln Road in Miami underscore growing investor interest in inner-city high-street locations — a trend also relevant to the European market.
Suburban beats urban — but the gap is shrinking
Since 2022, availability in suburban retail markets has been consistently below that in urban CBD locations. The spread has, however, narrowed over the past five quarters, presumably driven by return-to-office dynamics in US metropolises. According to Placer.ai, office occupancy in 2025 was only 32 per cent below the pre-pandemic level — a post-pandemic best.
Floor expansion figures are unambiguous: between Q1 2019 and Q1 2026, 218 million square feet were added in suburban submarkets, only 35 million in urban locations. Suburban retail thus remains the dominant growth driver of the US retail landscape.
Formats in detail: who is expanding, who is losing
At the format level, the picture becomes particularly important for investors and retailers. Grocery-anchored neighbourhood centres emerge as the most stable format – cap rate compression and rent growth are most visible here. Lifestyle centres and outlet centres benefit from the “experience retail” trend and record the strongest visitor-number gains. Class A malls in the demographically strongest metropolitan regions remain attractive to institutional investors despite mixed absorption figures.
Losers are primarily Class B and C malls in structurally weak regions and large power centres without anchor diversification. Notable is the return of the high-street segment in cities such as Boston, Miami, New York and San Francisco – after years of weakness, prime addresses again show clear rent and investment dynamics. For European investors, this high-street trend is particularly relevant because it is the pattern that – with different speed – also emerges in Germany’s A-cities.
Transfer values for European investors
From a European perspective, three observations from the US market are particularly instructive. First: cap rate compression in the retail sector takes place despite high interest rates – a clear signal for the relative attractiveness of the asset class versus office and logistics. For European investors interested in the return of retail properties to institutional portfolios, US dynamics are a leading indicator. Second: the share of the high-street segment in investment volume is markedly rising in the US. Boston, Miami, New York and San Francisco report price increases for inner-city retail addresses that can be expected in European metropolises two to three years after the US pattern. Third: grocery-anchored centres remain the most stable format in the US as well – another confirmation of the core thesis in the German market that food-anchored assets provide the most reliable cash flow base.
What the US market means for German retail real estate
The parallels to the German market are notable. In Germany too we see a split: stable to rising rents in A-locations alongside consolidation in B and C locations. Floor scarcity in the US market — driven by lack of new build — is mirrored in the German high-street situation, where vacancy rates in top locations are also historically low.
Three insights from the Newmark report translate to the German context: First, the “flight to quality” is not a passing phenomenon — retailers prefer to wait for the right location rather than take inferior space. Second, backfill activity in good locations remains high, giving owners of prime assets negotiating power. Third, the investment market is fundamentally revaluing retail real estate — after years of scepticism, capital is flowing again into brick-and-mortar retail.
*About UNIQUE RETAIL: As a specialist advisor for retail real estate, UNIQUE RETAIL supports owners, investors and tenants in transactions, location assessment and strategic positioning of retail properties — in Germany and with an eye on international market developments.*
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Frequently asked questions on the US retail market Q1 2026
How high was the investment volume for US retail real estate in Q1 2026?
Transaction volume for US retail properties reached around USD 19.0 billion in the first quarter of 2026 — the highest Q1 result in ten years. It follows a strong full year 2025 of USD 72 billion.
How are rents and availability developing in the US retail market?
The average asking rent stands at USD 16.20 per square foot (NNN), close to the all-time high. Availability holds at 5.3 per cent — clearly below the long-term average of 6.5 per cent. The main reason is the lack of a new-build pipeline.
Which retail formats perform best in the US?
Freestanding assets are the only format with positive net absorption in Q1 2026. Lifestyle centres and outlets record rising visitor numbers and rents. Power centres are under the greatest pressure with 3.1 million square feet of negative absorption.
What does the US retail trend mean for the German market?
Parallels are clear: flight to quality, floor scarcity in prime locations, robust backfill activity and rediscovered investor interest in brick-and-mortar retail. For German owners and investors, the US market confirms that core retail properties remain a stable and increasingly competitive investment field.
How does the interest-rate environment influence the US retail market?
The Fed has moderately lowered the key rate, but the rate level remains clearly above the pre-pandemic level. For retail investors, cash flow stability and cap rate compression in the sector remain attractive despite high refinancing costs – retail is the only asset class with a positive yield outlook for 2026.
*Sources: Newmark 1Q26 U.S. Retail Market Conditions & Trends Report. MSCI Real Capital Analytics. CoStar, 1Q 2026. U.S. Census Bureau, April 2026. Federal Reserve Bank of New York, Household Debt and Credit Report. University of Michigan, Consumer Confidence Board, March 2026. Placer.ai. Analysis & editorial commentary: Unique Retail, unique-retail.com. This article serves market information and does not constitute investment advice.*
Methodology: This article is based on Newmark’s 1Q26 U.S. Retail Market Conditions & Trends Report and complements core data with editorial commentary from retail real estate advisory. All figures refer to the US market unless otherwise noted.
