What’s in store for retail?

Most national retailers are entering 2026 with a sharper focus on agility, collaboration and future-proofing across their estates. From flexible lease models and curated store designs to greater consideration of sustainability and smarter data sharing, retail property strategies are evolving at pace.

Flex is the new fixed

Shorter lease terms, pop-ups and conditional incentives will dominate most subsectors, as retailers pivot quickly to manage footfall volatility and changing shopper profiles. Deals may include early term break rights, with inducements such as additional rent-free periods or fit-out contributions offered where tenants commit to the full term.

Contracting out of the Landlord and Tenant Act 1954 will remain common, even while reform of the legislation looms. Strategic assignments of prime sites should attract premium payments to retailers, alongside pre-emption rights giving landlords the means to take the property back if that is preferred. Redevelopment and performance breaks, with some linked to minimum sales thresholds, will become more prevalent, giving landlords greater flexibility to optimise opportunities and exit underperforming deals.

Breaking the risk

Break clauses will be under the microscope. Landlords will tighten compliance tests, while tenants push for clearer definitions of vacant possession and reinstatement to reduce risk. Failing to comply with break conditions will be costly. Maintaining a robust paper trail and diarising deadlines for break dates and notice periods are essential to
avoid disputes.

Where redevelopment accelerates in prime locations, landlords will seek flexibility to repurpose space. Tenants, in turn, are likely to push for redevelopment breaks conditional on planning consent and appropriate compensation. Disputes over whether landlords are unreasonably withholding consent will persist, particularly where assignment disrupts preferred tenant mix. Landlords will need to adopt clear, objective criteria as to acceptable financial standing, use and fitout standard to justify decisions and defend their strategy.

Beyond rent: partnerships with purpose

Rent profiles and review terms will adapt to the proposed ban on upward-only rent review. Turnover models and base rent plus top up, will become increasingly the norm, with caps and floors designed to balance risk and reward for both parties. Retail centres will continue to evolve as entertainment and social hubs, providing more diverse and experimental offerings. Greater participation in destination-led
events and promotions, click-and-collect integration and sharing footfall data will increasingly be prescribed in leases. The heavy trading in shopping centres in 2025 looks set to continue, and new owners working to their own investment profiles will bring fresh ideas and impetus. Sustainability clauses will further mature. “Lighter green” commitments to procure renewable energy, share data and follow environmentally responsible fit-out standards should now be expected. For the most part, these are mutually beneficial. “Darker green” measures, allowing landlords to instigate improvement works, will be seen more frequently. A significant driver will be a need to meet Minimum Energy Efficiency Standard obligations and the proposed requirement for a minimum energy performance certificate B rating by 2030.

Key takeaways

• Precision powers flexibility. Clear drafting of break, consent and redevelopment criteria keeps deals agile and secure, which will help landlords and tenants stay ahead and avoid costly disputes in 2026.
• Structure shapes resilience Shared success in 2026 depends on clear ground rules. Define turnover mechanics upfront, set transparent sustainability measures, particularly cost allocation, and design keep-open clauses for long-term flexibility.
• Tech thrives on terms. Innovation is exciting, but agreements need to evolve to avoid disputes and protect long-term value. Align tech ambitions with clear responsibilities, service standards and reinstatement provisions.

Blurred lines, sharper rules

Turnover rent disputes will intensify, as omnichannel retailing blurs the lines between physical and digital sales. Key to avoiding these is to carefully consider the definition of “turnover” on which rent is assessed. This must align to how the tenant’s business operates, and how sales are allocated across different channels. Important considerations include how click-and-collect orders are treated and which sales can genuinely be attributed to the premises. As darker green provisions find their way into more leases, many sustainability disputes will hinge on cost allocation: who, for example, funds plant upgrade or external improvements to meet ESG targets? These can be headed off by clearly allocating responsibility. Tenants may consider placing caps on their contributions. Because green obligations often rely on sharing performance data, it is essential to ensure this information is safeguarded. General Data Protection Regulation missteps can quickly derail landlord-tenant relationships. Keep-open covenants need futureproofing as retail centres adopt new uses. Tenants will want greater flexibility too close or adapt operations during redevelopment phases or when trading becomes commercially unviable.

Tech-tonic shifts in retail real estate

Retailers will seek to deploy AI and automation to all of their operation, including supply chains and instore personalisation. They will make significant investments, expecting efficiency gains to offset these costs and help counter other rising pressures. Leases will need to anticipate data integration. This will include point of sale feeds, Wi-Fi analytics and cyber obligations. Landlords providing shared digital infrastructure, service level agreements and disaster recovery terms will become standard. Technology introduces new fault lines. If analytics platforms fail, could turnover reporting, and therefore rent calculations, be compromised? Allocate risk clearly through agreed fallback reporting methods. Data sharing must respect confidentiality and intellectual property ownership. Be sure to avoid any assumptions of unrestricted access, which often spark disputes. Modern stores often integrate digital infrastructure, such as screens, sensors, cabling and analytics hardware, into their fit-outs. Refresh cycles can create disputes over timing, scope and responsibility. To mitigate this, leases should specify clear parameters for mid-term works, when they must be carried out and establish measurable performance criteria. For those tech-heavy store formats, reinstatement certainty is also critical. Define what stays, what goes and who bears the cost, because ambiguity here is a recipe for conflict.

Looking ahead: essential retailer actions for 2026

• Embed flexibility in every deal. Agree shorter committed terms, clear and practical break options and streamlined assignment rights to stay responsive to market shifts.
• Clarify turnover early. The use of hybrid rent models will intensify. Agree upfront on what qualifies as turnover to prevent disputes.
• Set sustainability benchmarks. Prepare for deeper green obligations. Assess what this means for reporting and potential cost contributions from the outset.
• Plan for tech integration and data governance. Anticipate AI-driven retail and shared analytics platforms. Include service levels, cybersecurity measures and clear IP/data ownership clauses in agreements.
• Agree refresh obligations. Understand both your desired upgrades and mandated refresh cycles. Ensure approval processes and cost allocations are transparent.

Refresh or regress

A well-appointed store remains a differentiator. Landlords will increasingly mandate periodic refreshing. Corresponding rent-free periods or provision of alternative premises, during the period of more substantive works, may be negotiated. Whoever is instigating the works, the approval process must be clear and streamlined. Retail in 2026 will test how well property strategies anticipate change. Success won’t come from rigid templates but from deals that balance precision with adaptability, helping landlords and tenants spend less time firefighting and more time trading. From a disputes’ perspective, most problems stem from unclear drafting in legal documents in a constantly evolving market. Break clauses, turnover definitions, sustainability provisions and tech-related obligations must be watertight. While strategies will vary by location, getting property fundamentals right will be central to navigating the challenges and opportunities of 2026.