Success in Memphis’ retail sector? The odds are higher for owners operating smaller-format properties, according to the latest research from Marcus & Millichap.
In its latest report, Marcus & Millichap said that smaller-format retail properties in the Nashville market continue to generate strong demand, while larger retail spaces are seeing rising vacancy rates following big-box and furniture-store closures in the region.
That divide is creating different opportunities for retailers and investors across the Memphis metropolitan area, according to the third-quarter 2026 Memphis Retail Market Report from Marcus & Millichap.
“Memphis retail demand is increasingly favoring smaller-format spaces, as daily-needs and discount retailers drive leasing activity even as several large-store closures reshape the market,” said Jody McKibben, senior managing director and market leader for Marcus & Millichap in Memphis, in a statement.
The demand for smaller spaces was particularly evident in the second quarter of this year, when small-format retail leasing activity reached a two-year high. Vacancy at properties of less than 20,000 square feet remained below 3% in June, according to the report.
And the Memphis market remains an attractive one for retailers that are experiencing growth spurts, according to Marcus & Millichap’s report. Brands such as First Watch, Raising Cane’s and Dutch Bros continued expanding in the Memphis market. Germantown also attracted national brands such as Alo Yoga and Warby Parker.
The news wasn’t as good for larger retail properties. Marcus & Millichap reported that the vacancy rate at retail properties of more than 20,000 square feet increased by about 50 basis points from a year earlier, reaching about 6% in June. Several large furniture-store closures contributed to this increase.
Despite that hiccup, investors are eager to sink their dollars into Memphis’ small-format retail class. Marcus & Millichap said that a near-record number of strip center transactions in the market helped support Memphis’ retail investment market. Investors are showing particular interest in small-shop properties where rents can potentially be pushed higher and where limited new construction is providing less competition.
Southeast Memphis, including the Hickory Hill area, was another active pocket of the investment market. Retail transaction activity there nearly doubled over the past year, attracting both institutional and private investors.
“Investor activity is increasingly concentrating in select retail formats and submarkets,” McKibben said, in a statement. “Near-record strip center trading and stronger sales activity in Southeast Memphis point to continued interest in well-positioned assets across the metro.”
