CoStar Forecasts U.S. Retail Vacancy at Mid-4.4% and 4–5M SF Quarterly Net Absorption
CoStar Group forecasts U.S. retail vacancy to peak in the mid-4.4% range in 2026 before tightening in 2027. It expects net absorption to average 4–5 million square feet per quarter in the latter half of 2026, following elevated Q1 move-outs driven by large batch closures.
1. Vacancy and Absorption Forecast
CoStar forecasts U.S. retail vacancy to peak in the mid-4.4% range in 2026 before stabilizing and gradually tightening in 2027. Net absorption is projected to remain modest through the first half of 2026, then rise to an average of 4–5 million square feet per quarter in the latter half of the year.
2. Elevated Move-Out Trends
First-quarter 2026 move-outs increased due to several large batch closures and a higher closure rate among mom-and-pop tenants. Store closures are expected to stay elevated near term as discretionary and value-challenged retailers rationalize footprints amid slower sales growth and rising operating costs.
3. Downside and Upside Risks
The forecast carries downside risks from elevated oil and gas prices, potential labor market softening, and lower-than-expected population gains, while possible consumer resilience offers upside. Overall, the balance of risks is tilted toward downside for U.S. retail fundamentals.