Despite persistent inflation and higher prices at the pump and grocery store, consumer spending continued to advance in March, according to Marcus & Millichap’s latest Retail Sales brief. Core retail sales, which exclude auto and gasoline purchases, rose 0.6% for the month, while year-over-year spending climbed 4.2%, underscoring resilient demand even as households face cost pressures.
The report notes that shoppers are adjusting their behavior rather than pulling back entirely. Analysts observed that more households are buying necessity and household items in bulk as a cost-saving strategy in response to elevated inflation. That shift is supporting stronger performance at general merchandise stores and warehouse clubs, where sales increased 1% over the period.
This environment is encouraging expansion among major club and warehouse concepts. Sam’s Club, Costco, and BJ’s Wholesale Club are each planning to open roughly 15 to 25 new locations this year, according to the brief. Much of this growth is expected to come from backfilling existing large-format spaces, which Marcus & Millichap characterizes as a tailwind for single-tenant leasing activity in boxes larger than 100,000 square feet.
On the space fundamentals side, the national retail vacancy rate edged higher between December 2025 and March 2026 but stayed below 5.1%. Vacancy in both single-tenant and multi-tenant formats remained at least 70 basis points below their long-term historical averages, indicating that supply and demand are still largely in balance even as the market absorbs modest softening.
Investment activity also showed momentum. Deal flow increased 21% over the 12 months ending in March compared with the prior year, with single-tenant retail properties recording the strongest gains. Marcus & Millichap interprets this pattern as evidence that more investors are seeking assets with lower day-to-day management requirements, aligning with the warehouse club and large-format single-tenant expansion underway.
The construction pipeline is another supportive factor for landlords. The brief highlights a broad pullback in new retail construction that is expected to persist through the remainder of the year. With fewer projects delivering, supply-side pressure should remain muted, improving the prospects for currently vacant space to secure tenants and helping to maintain relatively low vacancy levels.
At the same time, the report cautions that several macro risks could temper the outlook. Stronger-than-usual federal income tax refunds may be temporarily boosting discretionary purchases, raising questions about the durability of recent spending gains. Geopolitical tensions around the Strait of Hormuz, where port blockades remain in place despite an Iran ceasefire, could disrupt negotiations and keep oil prices elevated, feeding back into fuel and transportation costs.
Labor trends also bear watching. U.S. wage growth moderated in March, rising only 0.3% year-over-year after adjusting for inflation, which could limit consumers’ ability to absorb further price increases. The brief notes that core consumer price inflation increased a modest 0.2% last month, suggesting that, so far, higher fuel costs have not fully filtered through to broader consumer goods. Together, these dynamics paint a picture of a retail sector with solid near-term fundamentals but growing exposure to macroeconomic and geopolitical uncertainties.
