Retail construction hits record lows, making it hard to find space

Insight summary

• •Retail construction completions hit record lows at 5.7 million square feet in Q2, causing tight retail space availability at 4.9%.
• •Rising construction costs, labor shortages, and high land costs are major barriers to building new retail spaces.
• •Retailers prefer higher-quality, well-located spaces and are less willing to occupy older or cheaper properties.
• •The South, especially Houston, Orlando, Dallas, and Phoenix, leads retail construction driven by population growth.
• •In Texas and Florida, new shopping centers are typically fully leased before opening due to strong demand.
• •Retailers and landlords are adapting with smaller store footprints and more creative solutions to open stores.
• •Competitiveness is high to reoccupy spaces from closed big-box stores, with service tenants competing alongside grocers and retailers.