US Retail Sector NAICS 44, 45

Jul 17, 2026 - Retail Rent Growth Slows in Q2

• US retail real estate rent growth continued to normalize in the second quarter, with CoStar reporting asking rents rose 1.6% year over year, down from 1.9% in the first quarter and marking the slowest annual growth in more than a decade, according to a Chain Store Age report. While easing rent increases reflect softer consumer spending, elevated interest rates, and higher tenant costs, retail fundamentals remain historically healthy. Slower rent growth may provide retailers with modest occupancy cost relief as they expand or renew leases, although rent spreads remain near multi-decade highs because many existing leases are still below market rates. Meanwhile, retail development remains measured, with 72.1 million square feet under construction—below the 10-year average—and concentrated in high-growth Sun Belt markets such as Dallas, Houston, and Austin. The combination of limited new supply and moderating rents should help support a stable leasing environment for retailers.
• The CNBC/NRF Retail Monitor, powered by Affinity Solutions, showed US retail sales continued to grow in June, although monthly gains moderated as consumers remained selective with discretionary spending. Total retail sales (excluding autos and gas) rose 0.33% month over month and 9.41% year over year, while core retail sales (excluding restaurants, autos, and gas) increased 0.36% month over month and 10.08% year over year. However, the NRF noted that the unusually strong annual gains were partly due to comparisons with weak June 2025 sales; on a seasonally adjusted basis, total and core sales were up a more modest 4.26% and 4.23%, respectively. Sporting goods, hobby, music and book stores (+18.5% year over over), electronics (+14.2%), and clothing (+13.7%) led growth, while furniture (+4.9%) and building and garden supply stores (+4.0%) posted slower gains, indicating retail demand remains resilient but uneven entering the second half of 2026.

• Walmart’s expansion of drone delivery with Wing highlights the growing importance of ultra-fast fulfillment in US retail, according to Retail Dive. The retailer plans to add seven new metro markets and expand drone operations to more than 270 stores by 2027, leveraging its store network to deliver orders in as little as 30 minutes. The move raises consumer expectations for speed and convenience while increasing pressure on retailers to invest in last-mile delivery technologies. Walmart is also using drone delivery to compete more directly with Amazon, which has been expanding its Prime Air drone program as part of its broader effort to accelerate same-day delivery. As both retailers scale drone operations, the technology could become a key competitive differentiator, helping large retailers improve customer loyalty, drive e-commerce growth, and further integrate physical stores with digital fulfillment.
• The Conference Board's June Consumer Confidence Survey and the University of Michigan's preliminary July Surveys of Consumers suggest the US retail industry could see modest improvement in consumer spending, although shoppers remain cautious. The Conference Board Consumer Confidence Index edged up to 91.2 in June from 90.6, while the Present Situation Index fell 3.0 points to 116.4, reflecting weaker views of the labor market. The Expectations Index rose 3.0 points to 74.4, signaling greater optimism about future business and income prospects despite remaining below the recession-warning threshold of 80. Meanwhile, the University of Michigan Index of Consumer Sentiment climbed 9.9% month over month to 54.4, with the Current Economic Conditions Index up 15.1% to 54.9 and the Expectations Index up 6.5% to 54.0. Together, the surveys point to improving consumer confidence that could support retail sales, though elevated inflation expectations and labor market concerns may temper discretionary spending.