U.S. retail rent growth slowed to its weakest pace in more than a decade during the second quarter of 2026.
As of quarter-end, asking rents increased 1.6% year over year. The slowdown extends a trend that began in 2023.
The moderation reflects a market returning to more typical conditions after several years of exceptional growth. However, retail fundamentals remain healthy by historical standards.
Several factors have tempered landlords’ pricing power. Lower consumer spending, elevated interest rates, and higher operating costs continue pressuring retailers.
Following the pandemic, retail sales surged as consumer demand accelerated. Consequently, landlords gained significant leverage and pushed rental rates higher.
Today, retail sales growth has moderated across much of the sector. As a result, rent growth has eased while occupancy costs have returned to – or, in many markets, exceeded –
pre-pandemic levels.
Even so, many landlords continue strengthening property income through lease structuring. Larger annual rent escalations and reduced tenant improvement allowances help support effective rental growth.
Although those concessions are not reflected in headline asking rents, they can improve long-term property performance and net operating income.
The retail market continues transitioning from rapid post-pandemic expansion to a more balanced environment. Nevertheless, healthy occupancy levels and disciplined leasing strategies continue supporting the sector’s long-term outlook.
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