06/04/2026
U.S. retail vacancy sits near historic lows at ~4.4%, making it one of the strongest CRE asset classes this year — outperforming office (14%), industrial (7.5%), and multifamily (8.5%). New supply remains constrained, with retail construction well below the 10-year average. But how long can it last?
What's driving demand:
• Grocery, discount & value tenants leading absorption
• Service retail now accounts for 50%+ of leases — up from 40% just 15 years ago
• Wellness & fitness operators represent nearly 30% of service-based leases
• “Medtail” (healthcare in retail settings) is booming as consumers seek convenience over hospitals
• The U.S. wellness market hit $2.1T in 2024
Headwinds to watch:
• Tariffs have pushed imported goods ~6.6% higher and domestic goods ~3.8% higher vs. pre-tariff trends
• Gas prices have surged 50%+ nationally since the Iran war began (CA hit $6.116/gal on Memorial Day)
• Higher fuel costs ripple through freight, shipping & manufacturing — lifting prices broadly
• Consumer sentiment hit an all-time low in May (44.8 on U of M index — worst since 1957)
• 57% of consumers say high prices are eroding their personal finances
Retail has shown remarkable resilience, but the next chapter hinges on whether geopolitical relief can outpace persistent inflation pressure and weakening consumer confidence.
For a more indepth information on the retail market, read the full article at https://f.mtr.cool/ghhuvhcosh
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