Retail construction starts dropped in Q1
New retail construction starts fell sharply in the first quarter, signaling weaker near‑term activity in that segment and a likely reallocation of skilled trades rather than a broad labor surplus. For multifamily employers, that means trade availability may shift by project type and geography, not simply loosen everywhere. (commercialobserver.com)
The United States has just 64.2 million square feet of retail space under construction in the first quarter of 2026, down from about 70 million a year earlier and far below the 10-year average of more than 90 million square feet. CoStar said that puts retail building near levels last seen in the early post-pandemic recovery. (costargroup.com) That drop is not showing up because shoppers vanished. CoStar said demand is still solid in some fast-growing markets, but the math for new projects has broken as land, construction costs, and interest rates pushed required rents above what many retailers will actually pay. (costargroup.com) Retail developers are also building less because stores are asking for less space. CoStar said electronic commerce keeps pressuring soft-goods categories like apparel, so chains are choosing smaller footprints and selective expansion instead of opening big batches of stores. (costargroup.com) The slowdown is not evenly spread across the map. Dallas had just under 7 million square feet under construction in the first quarter, Houston had just under 4 million, and Austin had a little over 3 million, with most of that Texas pipeline already pre-leased before delivery. (commercialobserver.com) That pre-leasing point matters because it shows where crews are still busy. CoStar said several high-growth Southern metros still have tenants lined up early, while markets outside the South have more unleased space, which usually means slower commitments and shakier timing. (costargroup.com) Retail is also losing the land fight. CoStar said higher-density residential, industrial, and mixed-use projects are outcompeting many shopping-center deals for infill sites, so even landlords who want new stores often cannot make the site economics work. (costargroup.com) That does not automatically mean a flood of idle electricians, concrete crews, or framers. Associated Builders and Contractors said the construction industry still had 202,000 job openings at the end of February, and hiring fell to the slowest rate on record partly because contractors were still reluctant to let workers go. (abc.org) March data told the same mixed story. Associated Builders and Contractors said construction added 26,000 jobs in March, including 12,200 in nonresidential work, so the labor picture looks more like workers shifting between project types than a broad collapse in demand for trades. (abc.org) Other parts of commercial building are still pulling crews in different directions. Dodge’s March planning index rose 1.8 percent to 250.5, and Dodge said that gain came mostly from data center projects while most other commercial categories eased back. (constructionbusinessowner.com) So the practical read is narrower than “construction is slowing.” Retail starts are weak, but Texas retail jobs with signed tenants, apartment sites in growth markets, and giant data center builds are not competing for labor in the same way, which means trade availability is likely to loosen by niche and city rather than all at once. (costargroup.com) (constructionbusinessowner.com) (abc.org)
