The amount of new retail space coming online has reached historic lows, even as investor demand for the sector is heating up.
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Construction completions for the sector fell to 4.7M SF nationwide last quarter, according to CBRE, which said it is the lowest the metric has been since it began tracking it in 2005. It was down from a peak of more than 25M SF in Q4 2015.
The brokerage’s latest national retail report attributes the decline to high building costs and the construction industry’s ongoing labor shortage.
Despite the scant new product coming online, the national availability rate ticked up 10 basis points to 4.9% last quarter.
While the U.S. retail market recorded 1.7M SF of positive net absorption last quarter, a wave of bankruptcies triggered store closures that brought available space to the market.
The limited retail construction that is happening is primarily concentrated in the Sun Belt.
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Phoenix was the No. 1 market for new retail space last quarter, with 744K SF of deliveries. Dallas, San Antonio, Houston and Bakersfield, California, rounded out the top five.
The neighborhood, community and strip center segment led the retail sector last quarter with 641K SF of absorption, excluding freestanding retail, according to CBRE.
Power centers were the only segment in the report that had negative absorption in Q1, which CBRE attributed to the recent wave of big-box bankruptcies.
Department store chain Saks Global was one of the biggest retailers to declare bankruptcy last quarter. Its January filing came alongside plans to close 62 stores.
Eddie Bauer followed suit the following month and announced the closure of roughly 150 locations. It is the brand's third bankruptcy filing since 2003.
The retail sector has also become a bigger target for institutional investors.
Apollo Global Management in March said it would deploy $1B for a 49% stake in a new joint venture with Realty Income Corp. focused on single-tenant retail properties with long-term net leases.
That same month, Nuveen raised $330M for its U.S. Cities Retail Fund targeting grocery-anchored retail properties in affluent areas.
Nationwide retail sales volume totaled $66.8B in 2025, up 35% year-over-year, driven by institutional investors buying large properties, according to Newmark.
“Retail is on fire,” Newmark President of Capital Markets Chad Lavender said Friday on Bisnow's First Draft Live. “Everyone wants to buy retail across the board.”
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