Retail 2026 First Look: Flashing Red Lights and Retail Adaptations

Key Takeaways

• Redevelopment leads retail strategy in 2026. Owners are prioritizing existing assets and mixed-use projects as new construction costs remain volatile.
• Retail spending is increasingly split by income. Higher-income households continue to drive overall retail sales, while middle- and lower-income consumers pull back, creating simultaneous momentum for value retail and resilience in luxury and premium brands.
• Economic signals are mixed entering 2026. Consumer credit metrics suggest near-term stability, but rising delinquencies at the lower end raise caution for retail performance.

AGG has its eye on retail news so we’re ready on the legal side for on-the-ground conditions. A couple of headlines of note:

Redevelopment and Mixed-Use Projects Take Center Stage

Colliers’ “Global Retail: 2025 Trends and 2026 Outlook Report” stresses that redevelopment of existing commercial real estate assets will remain the priority in 2026. Even as interest rates come down, new development materials pricing remains volatile due to tariffs and the labor market. For new development, Colliers projects mixed-use retail to be more appealing as compared to standalone retail.

A Bifurcated Consumer: Value and Luxury Diverge

A number of news sources, including the Colliers report, reminds us that high-income households are carrying most of the U.S. retail spending at the end of 2025, and middle- to-lower-income spenders are pulling back due to higher costs across the board for necessities and discretionary spending. However, Anjee Solanki of Colliers notes an intriguing retail dynamic where value retail is seeing a boost from lower- and middle- income shoppers while luxury and premium brands remain attractive to higher-income spenders.

What Consumer Credit Trends Mean for 2026

We’re watching U.S. consumer leverage and debt delinquencies as an early snapshot of U.S. economic health. From what we’re reading, indicators are mixed. Goldman Sachs economist Joseph Briggs observes that credit card delinquency rates were leveling off through Q3 2025. Household debt service payments as a percentage of disposable income have steadied at around 11%, which is lower than pre-COVID and is “below levels that immediately preceded the three prior recessions going all the way back to 1990” (Reuters, “U.S. consumer delinquency glass is half full,” December 4, 2025). All that suggests spending stability (subject to pending impacts of the 2026 job market and tariffs, which could be major caveats). However, for lower-income households, auto loan delinquencies were rising through Q3 2025, suggesting stress at the lower-income end of the scale that could impact spending in 2026.

CMBS Outlook Highlights Property-Level Risk

Taking a peek at projected commercial mortgage-backed securities performance as a window into how bundles of properties are performing, Erik Sherman at Globe Street summarizes a recent Fitch Ratings forecast, stating that 2026 CMBS performance in office, retail, and hotel properties are likely to deteriorate, while multifamily, industrial, and data centers hold at neutral.

Preparing for an Uncertain Retail Landscape

Looks like no one has a clear 2026 crystal ball, so we’ll be ready for whatever comes. Keep telling us what you’re seeing out there and contact a member of AGG’s Retail team with any questions.