$14.2 Billion in Retail Construction — And No, Retail Is Not Dead
The numbers tell a different story than the "retail apocalypse" narrative that has dominated headlines since 2017. According to Dodge Data and Analytics, $14.2 billion in retail construction projects are planned or underway in the United States for 2026. That figure represents a 22% increase over 2024 spending and marks the strongest year for retail construction since 2018. The square footage under construction has returned to pre-pandemic levels, with approximately 142 million square feet of new retail space either under construction or in the permitting pipeline.
What changed? The retail industry figured out what physical stores are actually for. They are not warehouses where consumers pick products off shelves — that is what Amazon does better and cheaper. Physical stores in 2026 are brand experiences, service centers, fulfillment nodes, and community anchors. And building those kinds of spaces requires a fundamentally different construction approach than the strip malls and big boxes of the past.
The Experiential Retail Model Is Driving Construction
According to the International Council of Shopping Centers, 68% of new retail construction projects started in 2025-2026 include at least one experiential element: restaurants with open kitchens, fitness studios, demonstration areas, interactive product displays, or community event spaces. This is up from 31% in 2019 and reflects a permanent shift in how retailers think about physical footprint.
The data supports the strategy. According to Placer.ai foot traffic analytics, retail locations with experiential elements generate 34% higher visit frequency and 28% longer average visit duration compared to traditional retail formats. Retailers including Apple, Nike, Lululemon, and REI have been building experiential flagship stores for years, but the model is now filtering down to regional chains and independent retailers.
The construction implications are significant. Experiential retail spaces require higher ceiling heights (typically 16 to 24 feet versus 12 to 14 feet for traditional retail, according to Gensler), more robust HVAC systems (restaurants and fitness areas generate substantially more heat and moisture than standard retail), upgraded electrical capacity (AV systems, interactive displays, commercial kitchens), and enhanced plumbing for food service and restroom capacity.
According to RSMeans data, the average construction cost for experiential retail buildout is $185 to $265 per square foot, compared to $95 to $140 per square foot for traditional retail shell and tenant improvement. That cost premium is a direct opportunity for contractors with restaurant, hospitality, and specialty construction experience.
Who Is Building: The Top Retailers Investing in Construction
The retail construction spending is concentrated among several major categories of retailers, each with distinct construction requirements.
Grocery is the largest single category. According to Dodge Data and Analytics, grocery-anchored construction accounts for approximately $3.8 billion of the $14.2 billion total, or 27%. Kroger, Albertsons, H-E-B, Publix, and Aldi are all actively expanding or renovating. Aldi alone announced plans to open 120 new U.S. stores in 2026, according to their January press release, each ranging from 12,000 to 18,000 square feet.
The grocery format is evolving. According to the Food Marketing Institute, the average new grocery store in 2026 includes a 2,500 to 4,000 square foot prepared foods section — essentially a full commercial kitchen — compared to 800 to 1,200 square feet a decade ago. The construction cost for a commercial kitchen within a grocery store runs $350 to $450 per square foot, according to Foodservice Equipment and Supplies magazine, making grocery buildouts increasingly complex.
Discount and off-price retailers rank second at approximately $2.4 billion in construction spending, according to Dodge Data. Dollar General continues to be the single most prolific retailer by store count, opening approximately 800 new locations in 2025 and planning a similar pace for 2026, according to their 10-K filing with the SEC. TJX Companies (TJ Maxx, Marshalls, HomeGoods) and Ross Stores are also expanding, targeting 100 to 150 new stores each annually.
Quick-service and fast-casual restaurants account for approximately $2.1 billion in construction, according to Dodge Data. Chick-fil-A, Raising Cane is, Wingstop, and Dutch Bros Coffee are among the most active builders. Chick-fil-A alone has approximately 200 new locations under construction or in permitting, according to trade publication Restaurant Business. The typical Chick-fil-A costs $2.5 to $3.5 million to build, with emphasis on drive-through infrastructure that now often includes multiple lanes, covered canopies, and advanced order systems.
Fitness and wellness is a growing retail construction category at approximately $1.4 billion. Planet Fitness, Crunch Fitness, and boutique concepts like F45 Training and Orangetheory are expanding into former retail spaces. According to IHRSA (the health club industry association), gym construction starts rose 18% year-over-year in 2025. The typical gym buildout costs $120 to $180 per square foot, according to RSMeans, with heavy emphasis on structural floor reinforcement (weight rooms require 150+ psf floor loading), specialized HVAC, and plumbing for showers and locker rooms.
The Strip Mall Renovation Wave
New construction accounts for only part of the $14.2 billion total. According to ICSC data, approximately $4.6 billion — or 32% of total retail construction spending — is going toward renovation, repositioning, and re-tenanting of existing strip malls and shopping centers. This is the overlooked segment that is generating significant work for contractors.
The United States has approximately 115,000 strip centers totaling 4.2 billion square feet, according to CoStar Group. Many of these were built in the 1980s and 1990s and are functionally obsolete: low ceilings, inadequate parking ratios for modern uses, outdated HVAC and electrical systems, and building envelopes that fail to meet current energy codes.
Landlords including Kimco Realty, Regency Centers, and Federal Realty Investment Trust are investing heavily in renovation. According to Regency Centers is 2025 annual report, the REIT allocated $380 million to redevelopment projects across its portfolio of 400-plus shopping centers, focusing on adding outparcel restaurant pads, upgrading facades, improving energy efficiency, and re-tenanting anchor spaces with higher-traffic uses like grocers, medical clinics, and fitness centers.
The typical strip mall renovation costs $45 to $85 per square foot, according to RSMeans, with the range depending on whether the work is primarily cosmetic (facades, parking lots, signage) or involves significant structural and MEP upgrades. Re-tenanting a 50,000 square-foot anchor space for a grocery store or fitness center can easily cost $4 to $7 million, according to Dodge Data estimates.
Retail Construction Versus E-Commerce: The Real Relationship
The prevailing assumption that e-commerce kills physical retail construction is wrong — or at least oversimplified. According to the Census Bureau, e-commerce represented 16.4% of total retail sales in Q4 2025, up from 11.0% in 2019. But total retail sales also grew, from $5.5 trillion in 2019 to $7.1 trillion in 2025, according to the National Retail Federation. The pie got bigger, and both channels grew.
More importantly, e-commerce is actually driving certain types of retail construction. According to CBRE, last-mile distribution centers — small warehouse facilities of 50,000 to 150,000 square feet located in dense suburban and urban areas — represent approximately $3.2 billion in construction spending in 2026. Many of these facilities are being built on former retail sites or adjacent to existing shopping centers.
The buy-online-pick-up-in-store (BOPIS) model has also changed store design and construction. According to the National Retail Federation, 72% of major retailers now offer BOPIS or curbside pickup, up from 44% in 2019. The construction implications include dedicated pickup areas (typically 500 to 1,500 square feet of converted or new space), additional loading docks, expanded back-of-house storage, and enhanced IT infrastructure for order management systems.
Regional Hotspots for Retail Construction
Retail construction follows population and income growth, similar to residential construction. According to Dodge Data regional breakdowns:
The South leads with approximately 42% of all retail construction spending, or roughly $5.96 billion. Texas, Florida, Georgia, and the Carolinas are the most active states, driven by the same population growth dynamics fueling residential construction. According to the Texas Comptroller, retail sales in Texas grew 5.8% year-over-year in 2025, outpacing the national average of 4.1%.
The West accounts for 26%, or $3.69 billion, with California, Arizona, Nevada, and Colorado as the primary markets. Despite California is complex regulatory environment, the state is sheer population of 39 million supports substantial retail development, particularly in the Inland Empire and Central Valley where growth is fastest.
The Midwest holds 18%, or $2.56 billion, led by Ohio, Michigan, Illinois, and Minnesota. The region is retail construction is heavily weighted toward renovation and re-tenanting rather than greenfield development, reflecting slower population growth but a large existing inventory of aging shopping centers.
The Northeast accounts for 14%, or $1.99 billion, concentrated in the New York, Boston, Philadelphia, and Washington D.C. metropolitan areas. Urban retail construction in the Northeast tends to be smaller-format, higher-cost, and mixed-use, often involving ground-floor retail in residential or office buildings.
Construction Specifications for Modern Retail
The specifications for retail construction have evolved significantly. According to the U.S. Green Building Council, 34% of new retail construction in 2025 targeted LEED certification or equivalent, up from 18% in 2019. Energy code compliance — particularly the 2021 IECC, which is now adopted in approximately 38 states according to the Department of Energy — drives higher insulation values, more efficient HVAC systems, and LED lighting throughout.
Structural requirements vary by tenant type. Standard retail requires 75 to 100 psf live floor loading, according to the International Building Code. Grocery stores require 125 psf for storage areas. Fitness centers with free-weight areas need 150 psf or higher. Restaurant kitchens require enhanced floor drains, grease traps, and exhaust systems that add $40 to $65 per square foot to the base construction cost, according to Foodservice Equipment and Supplies.
Electrical demands have increased across all retail categories. According to the National Electrical Contractors Association, the typical retail space now requires 12 to 18 watts per square foot of electrical capacity, up from 8 to 12 watts a decade ago, driven by digital signage, point-of-sale systems, EV charging stations in parking areas, and energy-intensive lighting for product display. EV charging infrastructure alone adds $50,000 to $200,000 per retail site depending on the number of stations, according to the Department of Energy.
The Medical Retail Crossover
One of the fastest-growing segments within retail construction is medical retail — urgent care clinics, dental offices, physical therapy centers, and specialty practices occupying traditional retail spaces. According to Revista, a healthcare real estate analytics firm, medical retail construction starts rose 24% year-over-year in 2025.
Major healthcare systems including CVS Health (MinuteClinic and Oak Street Health), Walgreens (VillageMD), and Amazon (One Medical) are aggressively building clinic locations in retail settings. According to CVS Health is 2025 annual report, the company operated 1,100 health hub locations and planned to add 200 more in 2026. Each health hub buildout costs approximately $800,000 to $1.2 million, according to industry estimates, and involves medical-grade HVAC filtration, enhanced plumbing, specialized electrical for diagnostic equipment, and ADA-compliant exam rooms.
The medical retail trend creates opportunities for contractors with healthcare construction experience. The buildout requirements — infection control, medical gas piping, radiology shielding, and regulatory compliance — are beyond the scope of typical retail contractors. Firms that can bridge the gap between retail speed and healthcare quality are well positioned in this growing segment.
Supply Chain and Material Considerations
Retail construction benefits from relatively standardized material packages. According to the Bureau of Labor Statistics Producer Price Index, construction material costs relevant to retail — structural steel, concrete, glass curtain wall systems, and interior finishes — rose 2.8% year-over-year through February 2026, roughly in line with general inflation.
Lead times for key retail construction materials have largely normalized. According to the American Institute of Steel Construction, structural steel lead times are running 12 to 16 weeks for standard shapes, down from 24 to 32 weeks during the pandemic supply chain disruptions. Glass and glazing lead times are 10 to 14 weeks. Rooftop HVAC units are available in 8 to 12 weeks.
The one area of ongoing concern is switchgear and electrical distribution equipment. According to the National Electrical Manufacturers Association, lead times for switchgear remain elevated at 20 to 30 weeks for standard configurations and up to 40 weeks for custom assemblies. Contractors building retail projects with significant electrical scope should place equipment orders early in the design phase.
Frequently Asked Questions
How much is being spent on retail construction in 2026?
According to Dodge Data and Analytics, $14.2 billion in retail construction projects are planned or underway in the United States for 2026, a 22% increase over 2024. Grocery-anchored projects account for $3.8 billion, followed by discount retailers at $2.4 billion, restaurants at $2.1 billion, and fitness facilities at $1.4 billion. Strip mall renovation and repositioning represent an additional $4.6 billion.
Is retail construction growing or declining?
Retail construction is growing. The $14.2 billion in 2026 spending marks the strongest year since 2018, according to Dodge Data and Analytics. The growth is driven by experiential retail concepts, grocery expansion, restaurant construction, and renovation of the nation is 115,000 existing strip centers. The segment is evolving rather than declining — new stores are being designed as brand experiences and service centers rather than traditional product showrooms.
What does experiential retail construction cost per square foot?
According to RSMeans data, experiential retail buildout costs $185 to $265 per square foot, compared to $95 to $140 per square foot for traditional retail. The premium reflects higher ceiling heights (16 to 24 feet), more robust HVAC for restaurant and fitness uses, upgraded electrical capacity for AV and interactive systems, and enhanced plumbing. Restaurant-specific buildout within a retail space can exceed $350 per square foot.
Your Action Item for This Week
Pull the retail building permit filings from your county or city building department for the past 90 days. Categorize them by type: new construction, tenant improvement, renovation. Identify which general contractors and developers are most active. If you are a subcontractor with restaurant, grocery, or fitness buildout experience, reach out to the top three GCs on that list. The $14.2 billion in retail construction is flowing disproportionately to firms that understand experiential and food-service construction — make sure your capabilities are on their radar.
