Deploying With Discipline: 2026 U.S. Retail Fundamentals and the New Investment Playbook
"Santa Monica Place ~ a Shopping Mall" by Prayitno
“Bain Capital and 11North Partners Close $1.6 Billion Capital Raise to Invest Alongside their Co-Owned Open-Air Retail Platform”
Entering 2026, the U.S. retail real estate market is no longer being shaped by momentum trades or speculative recovery narratives. Instead, it is being defined by a return to fundamentals and a new investment playbook centered on precision, selectivity, and long-term repositioning. After several years of volatility, the sector has entered a more measured phase of its cycle, where limited supply, resilient consumer behavior, and disciplined capital deployment are driving performance. According to Cushman & Wakefield’s Q4 2025 U.S. Retail MarketBeat report, retail exited last year with approximately 3.4 million square feet of positive net absorption, the strongest quarterly result since 2023, while national vacancy held near 5.7 percent. These conditions have persisted into 2026, underscoring the market’s structural stability.
A defining characteristic of today’s retail landscape is the absence of excess supply. Only about 10.2 million square feet of new retail space was delivered nationally in 2025, a level well below historical averages and a sharp contrast to prior expansionary cycles. As a result, capital has shifted away from ground-up development and toward repositioning existing assets, particularly those with durable locations and strong surrounding demographics. Grocery-anchored neighborhood and strip centers continue to outperform, benefiting from consistent foot traffic and tenant demand tied to everyday consumer needs rather than discretionary spending alone.
Consumer behavior has reinforced this fundamentals-led recovery. Retail sales growth exiting 2025 remained healthy, with Visa Analysis and the Mastercard Spending Pulse reporting holiday spending rising in the 3.9 to 4.2 percent year-over-year range; importantly, approximately 73 percent of purchases occurred in physical stores. Entering 2026, this data has helped recalibrate expectations around brick-and-mortar retail, reinforcing the idea that physical locations — when properly positioned — remain central to consumer engagement and omnichannel strategies. For landlords and investors, this has translated into steadier occupancy, improving leasing velocity, and greater confidence in cash flow durability.
At the same time, capital markets activity reveals a notable shift in investor behavior. Rather than chasing broad retail exposure, investors are deploying capital with increasing precision, particularly within subsectors once viewed as structurally challenged. Shopping malls are a prime example. According to Altus Group Research, 38 single-asset mall sales transacted through the first three quarters of 2025 alone, matching the full-year total from 2024 and placing annual deal volume on pace for one of the strongest years in more than two decades. This momentum has extended into 2026, driven almost exclusively by high-quality, well-located malls with the scale and flexibility to support reinvention. Top-tier operators continue to report strong occupancy, highlighting the growing bifurcation between institutional-grade assets and obsolete properties.
Institutional capital flows further underscore this disciplined approach. In late 2025, Bain Capital Real Estate and 11North Partners raised $1.6 billion to expand their grocery-anchored shopping center platform, giving the venture more than $2 billion in deployable equity across North America. That raise reflects a broader shift in how large investors are underwriting retail in 2026 — prioritizing necessity-based tenancy, embedded population growth, and long-term income durability over short-term yield expansion.
Beyond traditional retail strategies, the new investment playbook increasingly incorporates transformational reuse. Underperforming malls and large-format retail sites are being evaluated not solely as retail assets, but as land-rich platforms for master-planned, mixed-use and residential development. In these cases, retail serves as an amenity rather than the primary driver of value, integrated into housing-led projects designed to capture demographic growth, lifestyle spending, and long-term land appreciation. This approach reflects a more holistic view of retail real estate — one that aligns capital deployment with broader urban and suburban development trends.
Looking ahead through the remainder of 2026, retail fundamentals are expected to remain supportive. Vacancy is projected to stay near historically low levels, while rent growth should remain modest but positive. Performance, however, will continue to diverge sharply by asset quality and strategy. Properties with strong tenant mixes, experiential components, and alignment with residential density are positioned to outperform, while assets lacking a clear repositioning path face mounting pressure to convert or exit the market.
Ultimately, retail real estate’s evolution in 2026 is less about recovery and more about discipline. With supply constrained, consumer demand stable, and institutional capital increasingly intentional, the sector has entered a phase where success depends on precise underwriting, thoughtful repositioning, and alignment with long-term fundamentals. For investors willing to deploy capital selectively, retail’s new investment playbook offers opportunities defined not by scale, but by strategy.
Sources
Cushman & Wakefield. Retail Q4 2025 MarketBeat. Cushman & Wakefield, Q4 2025. PDF report, https://assets.cushmanwakefield.com/-/media/cw/marketbeat-pdfs/2025/q4/us-reports/national/q42025usretailmarketbeat.pdf?rev=d72ea2ab906a4e4ab8266971a862b6ad.
“Bain Capital and 11North Partners Close $1.6 Billion Capital Raise to Invest Alongside their Co-Owned Open-Air Retail Platform.” Bain Capital, 16 Dec. 2025, www.baincapital.com/news/bain-capital-and-11north-partners-close-16-billion-capital-raise-invest-alongside-their-co.
Perry, Cole. “Investors Revisit US Malls Amid Mixed Consumer Signals.” Altus Group, 18 Dec. 2025, www.altusgroup.com/insights/investors-revisit-us-malls-amid-mixed-consumer-signals.