National median retail PSF rent in 2026 is $26.40/SF NNN, up from $23.10/SF in 2024 per JLL Retail Outlook. Shopping center anchored space, urban storefront, and strip center retail price differently. Restaurants pay 1.32x median retail rates due to grease-trap, hood, and gas line premiums per CBRE Restaurant Trends 2026.
TL;DR
Retail rent in 2026 has risen 14% nationally vs 2024 per JLL, driven by experiential retail and strong consumer spending. Three retail formats dominate: high-traffic urban storefront (highest rent), shopping center anchored (variable), and strip center (lowest base rent). Add percentage rent for shopping center and high-volume formats. TI allowance ranges $30 to $70/SF for second-generation space and $80 to $150/SF for first-generation white-box.
Retail rent by format (Q1 2026)
| Format | Typical $/SF/yr NNN | Notes |
|---|---|---|
| Urban storefront (Tier 1 metros) | $80 to $250 | NYC SoHo, SF Union Sq, Miami Lincoln Rd |
| Urban storefront (Tier 2 metros) | $40 to $90 | Atlanta, Charlotte, Nashville |
| Anchored shopping center (in-line) | $20 to $50 | Power center, lifestyle center |
| Strip center (small shop) | $15 to $35 | Suburban, neighborhood-serving |
| Mall (in-line) | $25 to $80 | Class A enclosed malls |
| Mall (anchor) | $10 to $30 | Department store positions |
| Outlet center | $30 to $70 | Variable by brand mix |
National median retail rent across these formats: $26.40/SF NNN per JLL Retail Outlook 2026.
Percentage rent in retail leases
Most shopping center and high-volume retail leases include percentage rent in addition to base rent:
- Apparel retail: typically 5 to 7% of gross sales above breakpoint
- Restaurant: typically 5 to 7% of gross sales (or sometimes specifically 6 to 8% for QSR)
- Service retail (hair, beauty): typically 6 to 8%
- Specialty/destination: variable
The natural breakpoint formula: annual base rent / percentage rate. For $84,000 base rent at 6% = $1.4M sales breakpoint. You only pay percentage rent on sales above $1.4M.
Always negotiate “natural breakpoint”, not artificial breakpoint. Artificial breakpoints below natural are stealth rent increases.
TI allowance for retail (Q1 2026)
Per LoopNet retail TI guide and Bhumi Calculator 2026 Retail Buildout Costs:
| Space type | TI allowance ($/SF) | Buildout overage (out of pocket) |
|---|---|---|
| Second-generation | $30 to $70 | $40 to $120 |
| First-generation white-box | $80 to $150 | $50 to $150 |
| Restaurant (second-gen) | $80 to $180 | $100 to $300 |
| Restaurant (first-gen) | $100 to $200 | $150 to $400 |
Restaurants get the highest TI because of grease traps ($15K to $40K), commercial hoods ($25K to $80K), and gas line installation ($10K to $50K). Always model your buildout overage above the TI cap before LOI.
Retail-specific lease structures
Co-tenancy clause: tenant has right to reduce rent or terminate if anchor tenant leaves or shopping center occupancy falls below threshold. Critical in shopping centers; standard in lifestyle centers. Activated when Saks/Lord & Taylor/JC Penney closures triggered tenant-side termination rights in 2024 to 2025.
Exclusivity / use clause: landlord agrees not to lease to a directly competing tenant within the shopping center. Critical for restaurants and specialty retail. Tight definition matters; “Italian restaurant” excludes another Italian restaurant but not a pizza chain.
Radius restriction: tenant agrees not to open another location within X miles of the shopping center. Common in restaurant and specialty retail. 2 to 5 mile radius is typical.
Operating covenant: tenant agrees to operate continuously during specified hours. Important for shopping centers because dark stores hurt the center.
How to evaluate retail rent
Three benchmarks to demand from the landlord before LOI:
- Per-SF rent of the last 3 retail deals in this center, with concession structure (free rent, TI, percentage rent breakpoint).
- Center occupancy and tenant mix: high occupancy + good co-tenants = healthy rent; below 80% occupancy = struggling center.
- Historical sales/SF of comparable tenants if available. Landlords don’t always share but it’s the right benchmark for percentage rent breakpoint.
For depth on metro-specific retail dynamics: Pillar: all-in commercial lease cost calculator and Commercial lease cost per square foot metro index.
Frequently asked questions
Do retail leases include percentage rent?
Yes, in shopping centers and high-traffic retail nodes. Tenants pay base rent plus a percentage (typically 5 to 7% for apparel, 3 to 5% for restaurants) of gross sales over a breakpoint. Strip centers and small standalone retail often don’t have percentage rent.
What’s a typical retail TI allowance?
$30 to $70/SF for second-generation space, $80 to $150/SF for first-generation (white-box) space, depending on use. Restaurants get the highest TI because of grease traps, hoods, and gas lines.
How much should I budget for retail buildout above the TI allowance?
Typical out-of-pocket overage is $40 to $120/SF for retail. Add another $30 to $80/SF for restaurant kitchen equipment that landlord doesn’t cover.
What’s a co-tenancy clause?
A co-tenancy clause gives the tenant the right to reduce rent or terminate the lease if the anchor tenant leaves or shopping center occupancy falls below a threshold. Activated when major department store closures (Saks, JC Penney, Sears) triggered tenant rights in 2024 to 2025.
How do exclusivity clauses work?
The landlord agrees not to lease to a directly competing tenant within the shopping center. The definition matters: “Italian restaurant” excludes another Italian restaurant but typically doesn’t exclude a pizza chain. Negotiate the definition tightly.
What’s a typical radius restriction?
2 to 5 mile radius around the shopping center. Tenant agrees not to open another location within that radius. Common in restaurant and specialty retail to prevent self-cannibalization. Push back if you have firm growth plans.
Has retail rent risen in 2026?
Yes, ~14% nationally vs 2024 per JLL Retail Outlook. National median retail PSF rent in 2026 is $26.40/SF NNN vs $23.10/SF in 2024. Driven by strong consumer spending, experiential retail demand, and limited new construction.
Should I negotiate operating covenant?
Push for flexibility on hours, especially for restaurants where lunch-only or dinner-only operations may be your model. Landlords resist but accept 2 to 4 hour daily windows in lifestyle centers.
Related guides
- Restaurant lease cost per square foot
- Commercial lease cost per square foot metro index
- Commercial lease types: NNN vs Gross vs Modified Gross
- Tenant improvement allowance calculator
Sources
- JLL Retail Outlook accessed 2026-05-02
- CBRE Restaurant Trends 2026 accessed 2026-05-02
- LoopNet TI Allowance Guide accessed 2026-05-02
- ICSC State of the Industry accessed 2026-05-02
Not financial or legal advice. Estimates based on publicly available market data and broker reports. Commercial real-estate is highly local and deal-specific. Consult a licensed commercial real-estate broker and a real-estate attorney before signing any lease.