Finally, A New Ground-Up Retail Development Cycle Has Begun

For the first time in 20 years, retail construction is trending up, according to JLL. This modest acceleration signals the start of a cycle that some industry players say will continue for the foreseeable future.

To be fair, the cycle is mild; most forecasts call for up to 1% annual growth in ground-up retail through 2029. And yet some anticipate that this period of steady construction will be healthier than the overdevelopment prior to the Great Recession. “We’ve had a down retail development cycle since 2008,” said Trademark founder and CEO Terry Montesi. “We literally had no new ground-up development that added any material amount of shop space for 18 years in our country. That’s a staggering length for a down cycle. We now have what I would call a select new retail development cycle starting. The retail capital markets have come back. Retail capital is flowing to invest in retail, in both acquisitions and development.”

Population Growth Is Driving Retail Development in the Sun Belt

The South’s population grew 6% from 2020 to 2025, double the national rate, per the U.S. Census Bureau. That population growth and demand for nearby essential retail have put lenders and developers in lockstep on funding and building in growing suburban areas of Sun Belt states.

“What has come back is institutional equity,” said Montesi. “Most institutions are either underallocated in retail or they’ve been out of retail for so long, they need to get back in. Or they just like the fundamentals of vacancy under 5% and healthy sales. The retailer community is as healthy as it’s ever been.”

Over a recent six-week stretch, Trademark and institutional partners secured financing for the ground-up construction of two suburban Texas open-air centers totaling more than 300,000 square feet, both anchored by Whole Foods. On Sept. 23, Trademark and Harrison Street Asset Management broke ground on the 111,000-square-foot retail portion of Shivers Farm in Southlake, outside Dallas. On Oct. 1, Trademark and MetLife Investment Management broke ground on the 202,000-square-foot Dunham Pointe in the Cypress suburb of Houston.

Colliers’ U.S. Retail Market Statistics Q3 2026 report underscores the concentration of construction in those Texas markets. Using CoStar data on retail properties listed as under construction — ground-up, adaptive reuse and conversion — Colliers counted 7.2 million square feet underway in Dallas-Fort Worth, the most of any U.S. market, followed by Houston with 5.1 million square feet.

In the Southwest, Vestar has eight ground-up retail projects totaling more than 3.5 million square feet. It has completed development, for example, at Queen Creek Crossing, Vineyard Towne Center and Shops at Lake Pleasant near Phoenix, representing over $200 million in new retail totaling more than 750,000 square feet. And it recently announced an additional 15,000 square feet of ground-up space at Queen Creek Marketplace for four restaurants.

“We’re playing catch-up on 12 to 14 years of population growth, and certain markets grew exponentially, like Phoenix,” said Vestar vice president of finance and development Kean Thomas. “We moved a million people into town but didn’t build a single new open-air shopping center that wasn’t just a grocery store and some shops and pads.”

Ground-Up Retail Development Depends on Access to Construction Financing

Financing new projects has not been easy for developers, given how long the market had stagnated. Vestar was able to secure financing in 2024 for Verrado Marketplace — a 500,000-square-foot, Target-anchored center in the Phoenix suburb of Buckeye delivered in May — thanks to its longtime association with the privately held First International Bank & Trust in Phoenix.

Robert Morris, senior vice president of commercial real estate lending at the bank, said he and his bank have worked with Vestar for some 30 years but after the 2008 recession and through the pandemic, all development and funding stopped. The Verrado Marketplace loan “was one of the first big construction loans I’d done for a shopping center and one of the first that Vestar had endeavored to develop in almost 20 years,” said Morris. “By the time they broke ground, that center was well over 90% preleased, and the good news is they’ve got another [Phoenix] project that I’m looking at financing for them in Laveen Village, which is about the same size as Verrado. So at least in terms of my relationship with Vestar, our construction loan activity is robust again.”

Big V Property Group activity around the expanding Dallas-Fort Worth also lends credence to a new ground-up cycle. The metroplex’s retail development per capita outpaces every major market in the U.S., according to JLL’s United States Retail Market Dynamics Q2 2026 report, with 95.9 square feet of retail under construction per 100 residents. That is 40% more than Florida’s Tampa-St. Petersburg, the second-leading market at 69 square feet per 100 residents, and astronomically higher than the national average of 16.4 square feet per 100 residents. “I wouldn’t say that this [cycle] is going to be a surge, certainly not getting back to pre-GFC levels, but I would also say that the environment for new development does look very favorable,” said Big V director of research Mike Jordan.

Big V has preleased ground-up projects in suburban Anna, where 8,000 new homes are in the pipeline and the population is expected to increase another 55% in the next eight years. Though his company had lined up the retailers, done the research on new rooftops and drawn up maps showing the area’s potential for growth, it still took 18 months to convince the banks to approve a construction loan that included public incentives. “A lot of people at the banks haven’t financed a large-format retail center in their entire career,” Jordan said, “so this is going to take some relearning on the lender side.”