Retail investment brief | September 2026
The Replacement Cost Gap
Why quality, location and a hard-to-recreate basis can matter more than the rate on the day you close.
Construction costs have continued to grow, new development has become more selective, and national retail vacancy remains tight. This 11-page brief examines what those conditions may mean for the value of existing retail real estate.
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Inside the report
A practical framework for pricing hard-to-replace retail
The report connects construction costs, supply, tenant demand and buyer activity to the questions that matter at the asset level.
The construction cost reset
See how commercial construction prices moved 52.3% higher since August 2020 and why that matters for future supply.
The replacement math
Follow the illustrative math that moves a $300 per SF earlier-cycle build to approximately $457 per SF at 2026 prices.
Demand and occupancy
Review the vacancy, retail sales and public-company occupancy signals supporting well-located retail.
Buyer depth
Understand how 1031 investors, private family capital and smaller funds can price the same asset differently.
Two paths to lease value
Compare the durability of established income with the upside available when lease terms, rents or operations can be improved.
Four asset-specific questions
Apply the thesis to replacement cost, site replicability, lease economics and the buyer pool for a particular property.
The thesis becomes useful when it is applied to a specific asset.
Use the brief to frame the conversation around location, lease structure, replacement basis and the buyers most likely to compete today.