U.S. retail construction activity declined in the third quarter of 2026

U.S. retail construction activity pulled back in the third quarter of 2026, according to data from CoStar, the leading global provider of online real estate marketplaces, information and analytics in the property markets.

In Q3 2026, roughly 58.3 million square feet of retail space was under construction in the U.S., down from 60.6 million square feet in Q2 and 63.3 million square feet in Q1. Despite being unchanged from a year prior, the metric remains roughly 4% below its prior 10-year average of 60.7 million square feet.

New construction starts fell to their lowest quarterly total since at least 2016. Developers broke ground on about 7.7 million square feet of retail space during Q3, down from 10.7 million square feet in Q2.

“The pullback in construction reflects a development environment that remains difficult to pencil in most markets,” said Brandon Svec, national director of retail analytics at CoStar Group. “Elevated land prices, construction costs and borrowing costs have pushed required rents well above prevailing market levels for many retail formats, and flat asking rents during the quarter did little to close that gap. Third-quarter construction data supports our current view that retail supply growth will remain limited for the foreseeable future. Based on current conditions, with starts at their lowest level in at least a decade and financing costs moving higher, we expect the pipeline is likely to shrink further before any meaningful recovery takes hold.”

New retail construction remains heavily concentrated within a limited number of markets. Texas continues to lead, with Dallas-Fort Worth, Houston and Austin collectively accounting for about 15.5 million square feet under construction, which is nearly 27% of the national pipeline.

The 15 largest pipelines account for roughly 56% of all space under construction, highlighting how limited development remains outside of markets where population growth and tenant expansion plans can still support new projects.

The full analysis can be found here.

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