Shopping Centers Are Having a Moment: What Record-Low Vacancy Means for Owners

A decade ago, the conventional wisdom said e-commerce would hollow out the American shopping center. The 2026 data says the opposite happened. Vacancy is sitting near record lows, rents are climbing, leasing volume has reached multi-decade highs, and institutional capital is buying shopping centers again at the strongest pace in years. If you own a center — or you’ve been thinking about buying or selling one — here’s the picture.

The Fundamentals: Tight, Tighter, Tightest

CoStar pegs national shopping center vacancy around 4.4%, well below the 5.3% historical average. Cushman & Wakefield’s broader measure across all shopping centers reads 5.9% — also far below its long-run norm of 7.4%. Asking rents grew about 2.3% year over year nationally. Even with a seasonally soft first quarter (absorption gave back space amid severe winter weather and a handful of chain-specific closures), the structural story is unchanged: demand for space is healthy and there is very little of it available.

The reason is simple supply math. New shopping center construction has been minimal for over a decade, and analysts expect retail construction starts to fall further this year. Every expanding grocer, discounter, QSR brand, and fitness concept is competing for space in centers that already exist. That’s why the strongest open-air REITs are reporting occupancy at or near all-time records and historic leasing years.

Capital Has Noticed

Investment activity has followed the fundamentals. Retail investment sales topped $15 billion in the first quarter — the highest quarterly figure in three years — and the buyer pool has changed character. Institutional bidding activity has roughly doubled over the past two years, and REIT bidding is up even more sharply, the strongest showing from those buyer groups in nearly a decade. Average open-air center pricing has pushed to roughly $142 per square foot, about 14% above the five-year average.

Translate that from research-speak: the cap rate compression owners have been waiting for is beginning to show up in actual closed sales, not just broker guidance. Grocery-anchored and necessity-based open-air centers are leading the way, prized for their steady weekly-needs traffic and resistance to e-commerce.

What Smart Owners Are Doing

Pushing rents at renewal. With vacancy this low and replacement space scarce, below-market leases rolling over are the biggest embedded value in most centers. (We cover exactly how to capture it in our article on the rent renewal windfall.)

Upgrading the rent roll. Backfilling a weak tenant with an expanding value retailer, grocer, or food concept doesn’t just stabilize income — it re-rates the whole center in the eyes of today’s buyers.

Testing the market while institutions are bidding. Deep-pocketed buyers chasing a thin supply of quality centers is the best seller’s setup this asset class has seen in years. Owners who were waiting for “a better market” should recognize that, for well-leased centers, this is the better market.

The Bottom Line

Shopping centers have gone from the asset class everyone wrote off to one of the most sought-after corners of commercial real estate. Vacancy near record lows, rising rents, almost no new supply, and a resurgent institutional bid add up to genuine pricing power for owners of well-located, well-leased centers — and a competitive, fast-moving market for buyers.