Retail Sales Implications

Retail Sales Growth Supports Economy and Commercial Real Estate

• Consumer spending remains a key economic driver, accounting for nearly 70 percent of U.S. GDP.
• Retail sales have exceeded expectations in 2026, rising 6 percent year-over-year in August, while the year-to-date measure averaged a robust 5.2 percent.
• Outside of post-recession recoveries, retail sales growth of this magnitude is historically uncommon. 
• Adjusted for inflation, retail sales increased 2.5 percent in August and have averaged 1.7 percent growth year-to-date. 
• Core retail sales, excluding autos and gasoline, rose 5.6 percent nominally in August, or 2.4 percent in real terms. 
• Despite slower job creation, weak consumer sentiment, and elevated inflation, consumer spending remains a key source of economic support. 

Households remain well positioned. Underlying financial strength continues to support purchases across traditional and experiential categories despite historically elevated borrowing levels.

• Consumer spending has been supported, in part, by borrowing, with auto, credit card, and total household debt at or near
  record highs as of June.
• However, incomes have also been rising, placing downward pressure on debt as a percentage of income. 
• Consumer savings, including money market mutual funds, remain at all-time highs despite economic headwinds and have risen 4.5 percent in the past year
• Taken together, household debt, income and savings trends suggest that U.S. consumers remain financially healthy overall.
• Among retail categories, sporting goods, restaurants and bars, and building materials have recorded some of the strongest gains outside of e-commerce.
• Experiential retail, including fitness, entertainment, beauty, and spa categories, has outperformed in the post-pandemic years.

Benefits extend across property types. Resilient household activity is driving healthy space demand, rent gains, and capital deployment across the broader commercial real estate landscape.

• Strong retail sales are supporting retail and industrial real estate, while broader economic growth and proximity to consumer amenities also benefit apartment and office space demand. 
• Industrial net absorption exceeded 86 million square feet in the first half of 2026, more than four times the volume recorded during the same period last year.
• Despite slowing construction, industrial supply continues to outpace demand, sustaining a national vacancy rate of 7.8
  percent as of the second quarter
• Multi-tenant retail vacancy remains steady at 5.8 percent, including a 9 percent vacancy rate for shopping mallsFor investors with available capital, refinancing pressures may create attractive acquisition opportunities while placing additional upward pressure on cap rates.
• Excluding malls, vacancy across grocery-anchored, unanchored, lifestyle, and power centers is tighter at 4.9 percent.
• Tight multi-tenant retail vacancy continues to support rent growth, which stood at 2.2 percent year-over-year in June.
• Retail investment activity remains strong, with multi-tenant deal volume 4 percent below the 2022 peak, while trailing 12-month single-tenant transaction velocity reached a record high.
• Despite persistent economic headwinds, positive retail sales and consumption continue to support commercial real estate performance and broader economic growth.