Leasing momentum in U.S. retail real estate is carrying enough force into 2026 to shift the balance of power toward landlords, according to Christopher Ressa, executive vice president and chief operating officer of DLC Management and host of the Retail Retold podcast. Reflecting on recent deal flow across DLC’s portfolio and conversations with owners, brokers and tenants, Ressa argues that strong tenant demand against a constrained supply backdrop is setting up what he calls “the early innings of a pricing cycle” in favor of retail owners.
Robust Demand, Few True Weak Spots
In a recent episode, Ressa stated that “leasing velocity remains robust” and emphasized that “the demand for space is outweighing the supply on the market” across a wide range of categories. He noted that while there are “certainly winners and losers” at the retailer level, the operators that are expanding are “crushing it,” and that individual failures should not be read as a signal that “retail is in a bad place.” Instead, he sees a sector where retailers “have a conviction at scale about the U.S. consumer and the need to open up physical locations,” even as macro data and headlines sometimes suggest caution.
That conviction is colliding with a supply picture that remains tight. Ressa pointed to the lack of large-scale retail bankruptcies during 2025, when Joann, Big Lots and Rite Aid filed for protection, which collectively put a significant number of doors back on the market.
“There’s no forecast for that many doors to file in 2026,” he said, noting that the absence of a similar wave this year will limit the amount of distress-driven space available to re‑tenant. At the same time, new construction remains muted due to a mix of capital market, cost and entitlement reasons, which means incremental demand is being forced into existing centers rather than relieved by ground-up supply.
Early Innings of a Pricing Cycle
Ressa described the combination of robust demand, limited bankruptcies and scarce new product as the core foundation of the emerging pricing cycle.
“I believe this is the early innings of a pricing cycle in retail real estate,” he said. “This is the year that the lack of supply and the lack of new construction, with the consumer discretionary spend rising and the amount of new business formation, new retailers that want to open up stores, new uses coming into retail real estate… collide at retail real estate to grow rents.”
In his view, this convergence is poised to show up in leasing spreads, both on new deals and existing tenant renewals.
The demand side of the equation is being reinforced by a consumer backdrop that Ressa expects to improve in 2026. He cited the “fading of tariff‑related inflation” and tax changes he believes will be “primarily to the middle class,” leading to “a larger disposable income to the U.S. consumer this year.”
That, he said, “usually leads to more spending when they have more disposable income,” bolstering retailer confidence in store economics and expansion plans. Against this backdrop, retailers that have navigated the past several years successfully are looking to lean into physical growth rather than pull back.
Much of the impact is still in the pipeline. Ressa noted that DLC and its peers signed a “ton of tenants” in 2025 that “still haven’t opened in 2026,” which means more occupancy and improved merchandising are still to come as those stores deliver. He described the volume and variety of users in current deal‑acceleration meetings as “staggering,” spanning different uses, markets and tenant types. As those stores open, they will take more space off the market, further tightening quality centers and reinforcing traffic and sales performance that can support higher rents.
Shared Build‑Out Costs
The changing environment is also altering how deals are structured. Ressa pointed back to the pandemic period, when “the cost to install tenants rose,” driven primarily by higher construction costs, with landlords typically bearing most of that burden.
“What you’re starting to see is some of the retailers and tenants take some of that burden,” he said. He offered a simple example: on a space that “needs to be 30” per square foot to pencil for the landlord because the build‑out runs “100 a foot,” one solution might be to strike a rent at 25 with the landlord spending 70 a foot instead. That kind of give‑and‑take, he said, “is going to improve velocity” while still delivering better economics than prior vintages.
Net Effective Rent Poised to Rise
Those shifts point to a broader change in net effective rent, not just in headline numbers. Ressa expects rent growth to show up in multiple ways: “maybe the answer is going to be… lower CapEx spend to landlords,” he said, while also emphasizing “pure rent growth, like on renewals and things like that, pure rent growth that we’re seeing.”
In a market where many tenants have limited relocation options and well‑performing centers are full or near full, landlords have more leverage to push renewal rents, trim tenant improvement packages or both. For investors, that mix can support yield expansion even if nominal face rates on some new leases seem only modestly higher.
Ressa stressed that the story is not uniformly positive for every retailer or asset, and he cautioned against drawing sector‑wide conclusions from isolated setbacks. When a retailer struggles, he said, “that means that business just didn’t work, not that retail is in a bad place.”
In his view, the more important signal for capital is the breadth of categories where leasing is “crushing it,” the volume of new concepts looking for space and the willingness of tenants to absorb more of the build‑out burden to secure locations. Taken together, he argued, those factors suggest that 2026 will be “meaningfully better” for retail landlords than 2025 and could mark the start of a more durable period of rent growth in the sector.
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