**The 2026 Retail Forecast: Steady, Resilient, and Experiential**
The post-pandemic years have repeatedly heralded retail’s imminent decline. Yet as we enter 2026, the retail sector has proven itself to be one of the most resilient and stable asset classes within commercial real estate. Despite economic headwinds, including cutbacks from lower-income households and fluctuating consumer sentiment, experts agree that retail retains strong fundamentals.
“Retail has remained solid,” said Darren Pitts, Co-Founder and Executive Vice President at Velocity Retail Group. “The overall view for the sector in 2026 is that it will be steady.”
Stephanie Skrbin of Axiom Retail described 2025 as a year of “steady” and “resilient” performance. Leasing activity remained strong across A and B class centers, and investment activity and pricing saw noticeable upticks.
Martindale emphasized that innovation has helped bolster retail’s staying power. “New experiential, omnichannel, and mixed-use formats invigorated the sector,” she said.
J. Wickham Zimmerman, CEO of Outside the Lines, Inc., also pointed to experiential retail as key to driving foot traffic. “Consumers prioritized convenience and price sensitivity, but also sought out immersive experiences that encouraged them to spend more time on-site,” Zimmerman noted.
However, experiential retail is an evolving concept. Martindale explained its variation: “Experiential now includes immersive engagement, product testing, entertainment, and food and beverage. Some segments grew while others contracted—these changes were often brand-specific.”
Notably, Brad Umansky, President of Progressive Real Estate Partners, gave retail’s 2025 performance a solid “B.” Although occupancies remained high and capital markets began to unfreeze, a considerable volume of anchor and sub-anchor space re-entered the market over the past 12 to 24 months. According to Umansky, while some of this space was leased by brands like Sprouts, Grocery Outlet, and Burlington, a substantial share is still available and may take time to absorb.
**Grocery and Discount Retail Lead the Pack**
Retail continues to cover a broad spectrum, from massive regional malls to small neighborhood restaurants. One standout sub-sector is grocery, which experts agreed was among the strongest performers, followed closely by discount retailers.
“Market leaders like ALDI continue to thrive on their value platforms,” noted Pitts. “Meanwhile, value-focused retailers such as Costco, Walmart, Ross, and TJX continue expanding.”
Jim Dillavou, Principal and Co-Founder of Paragon Commercial Group, observed a shift in grocery-oriented tenant configurations. Grocery anchors now seek adjacency to services such as fitness centers, salons, dental offices, and pet services. “The data shows these adjacent services increase customer dwell time and raise basket sizes,” he explained.
However, the grocery segment did face challenges. According to Sandy Sigal, CEO and President of NewMark Merrill Companies, consolidation and disrupted deals (like the stalled Kroger/Albertsons merger) dampened growth. While major chains were cautious, niche grocers such as ALDI, Sprouts, and Trader Joe’s continued to expand, albeit selectively.
Meanwhile, discount retailers, despite growth, faced pressures from inflation, labor costs, and shifting consumer behavior. “This resulted in slower leasing momentum and some store closures,” Skrbin said.
**Vacancy and Development Challenges**
2025 also brought a wave of bankruptcies. According to Jason Baker, Principal and Co-Founder of Baker Katz, there were 569 store closures and 1,118 store openings. “Most closures reflected brands that have long struggled financially,” he explained.
Although the closures introduced more available retail space, in some markets, those vacancies were quickly absorbed, according to Umansky. However, weaker submarkets lagged. “Releasing takes longer in such areas, and retail may no longer be the highest and best use,” Martindale noted.
Long-term vacancies also remain a concern. Umansky warned that big box spaces left empty over the past year may continue to languish unless creative solutions and unique tenants step in.
On a positive note, existing vacant space has helped offset a sharp decline in new retail construction. Looking ahead, the experts foresee development remaining minimal in 2026.
“Development remains tough to pencil except where subsidies or creative financing exist,” said Dillavou. Pitts agreed, noting that new store development will require higher rents, demanding stronger commitments from tenants.
Despite these challenges, a tighter development pipeline might be beneficial in the short term. “The limited new construction will keep vacancies low and give landlords more leverage in rent negotiations,” Skrbin stated. She also observed that restaurants are particularly drawn to second-generation spaces, sparking heightened competition for those locations.
Martindale added: “Through limited construction and creative repurposing of obsolete space, we have cultivated a stronger, more resilient retail stock.”
**2026 Outlook: Cautious Optimism**
As we head into 2026, the prevailing sentiment is one of cautious optimism.
“Strong leasing momentum combined with capital flow into retail will create a competitive buying landscape,” predicted Dillavou. “Buyers will be ‘risk-on’ when underwriting value-add assets.”
Pitts noted that strong retailers continue to grow and gain market share both in brick-and-mortar and online formats. This positions retail investment well, particularly in Tier 1 growth markets.
Zimmerman anticipates that experiential and necessity-based retail will continue to drive performance. “Centers that offer authentic gathering places—and prioritize dwell time and convenience—will deliver strong ROI,” he added.
To remain competitive, tenants and landlords alike must prioritize placemaking, flexibility, and value-added amenities. “Those that fail to evolve risk becoming irrelevant,” Zimmerman warned.
**Risks on the Horizon**
Looking ahead, the retail sector faces several risks. According to Pitts, changes in interest rates will significantly influence refinancing and portfolio management decisions for both REITs and private owners.
Martindale explained that inflation and category-specific issues, such as challenges in the retail pharmacy segment, pose additional threats. She also drew attention to the hidden concern of unproductive tenants—those who occupy space but don’t meaningfully contribute to customer traffic or cross-shopping opportunities.
Skrbin warned of a broader market reset. “High costs, technological lag, and evolving consumer preferences are forcing many retailers to modernize or risk obsolescence,” she said.
Despite these challenges, Sigal remains optimistic. “Retail is in the midst of a strategic reset. Fast expansion is out; thoughtful, rational growth is in,” he concluded.
In summary, while not without its hurdles, 2026 is shaping up to be a year of stability and measured growth for the retail sector—much like 2025, but with sharper focus and growing investor interest.
