Fed Rate Cuts Ignite New Momentum: What Commercial Property Owners Must Act On Now

Marc Perlof • December 15, 2025

By Marc Perlof | MarcRetailGuy

December 15, 2025

If you own retail real estate, here is what the newest Federal Reserve move means for your property today.


Another ¼ point reduction in interest rates was the result of the Federal Reserve's most recent decision. Jerome Powell highlighted a weakening economy, decreasing inflation, and an obviously cooling labor market in his speech. He pointed out that while services continue to soften at a gradual, steady pace, goods inflation is still sticky due to tariffs. The Fed wants to reduce inflation without overturning the labor market, and employers are cutting down on hiring. Crucially, Powell also stated that policy is already almost neutral and that future decisions will be careful and data-driven rather than instinctive. As the year draws to a conclusion, these signals now influence the actions of regular investors.


What does this mean for owners right now?
Property values are not increased by rate reductions alone. They accomplish this by lowering uncertainty. Investors resume underwriting as borrowing costs become more predictable. Tours pick up, buyers start modeling offers they passed on a month earlier, and lenders start pricing. Activity nearly always rises first, even if final price has not yet changed. This translates into firmer terms, more talks, and buyers who are now ready to step off the sidelines for active listings.


This change is supported by recent economic data. Due to consistent consumer expenditure, services are still growing. As new orders and jobs decline, manufacturing continues to suffer. While the manufacturing PMI is below 50 for the ninth consecutive month, the Institute for Supply Management's (ISM) non-manufacturing Purchasing Managers' Index (PMI) is in expansion territory. The majority of retail tenants reside in the services sector of the economy rather than the goods-producing sector, which makes this division significant.


Expect additional momentum for current listings over the following few weeks. Because the US inflation forecast is uncertain, investors continue to underwrite cautiously; yet, direction is important. The direction is getting better for the first time in months.


Powell's speech and the national surveys for Q1 and Q2 2026 indicate a two-stage year with a significant warning about future rate decreases. According to the Fed's own estimates, officials anticipate at most one more rate decrease in 2026. Powell emphasized that the Fed is "well positioned to wait" and evaluate new information before taking action. This implies that the market shouldn't anticipate quick or forceful relaxation.


• Q1 2026 can seem sluggish. Input prices are still high, hiring is declining, and many companies will postpone plans for growth as they wait to see if inflation continues to decline. Buyers will remain picky as the Fed is probably on hold.
• If inflation continues to decline and the Fed implements small, gradual monetary policy changes, Q2 2026 may see a recovery. When paired with more precise policy guidance, even one more cut can increase transaction volume before it increases pricing. Value shopping, food, retail related to everyday necessities, and service-based tenants ought to perform well. Thin-margin businesses and merchants who sell a lot of goods may find it difficult to keep up with growing expenses.


Key insights for property owners today:


• Services PMI remains in expansion, showing steady consumer demand².
• Manufacturing PMI continues to contract, signaling weakness in goods production².
• Employers across sectors are slowing hiring, supporting Powell’s cooling labor market comments¹.
• Construction and TI costs remain high due to elevated material prices, including steel, electrical components, and aluminum².
• Cap rates are unlikely to compress quickly, but clearer Fed guidance helps stabilize valuations.


Recent data worth noting:
The ISM non-manufacturing index remained above 52 in November 2025², showing healthy service-sector activity tied to consumer spending.
Powell's warning that the job market is deteriorating was reinforced when manufacturing employment dropped to one of its lowest levels this year¹.


This is the time for owners to get ready. As underwriting becomes more stringent, clean rent rolls, transparent financials, current CAM reconciliations, and compelling tenant narratives become increasingly important. The owners who are ready make the first gains when activity increases before prices change.


If you want to understand how today’s economic shift and the Fed’s cautious 2026 outlook impact your value, cash flow, or timing for a sale or refinance, let’s talk. Call or DM me for more information.


With the Fed signaling patience in 2026, are you positioned to benefit from higher activity before pricing fully adjusts?


#RetailRealEstate #FederalReserve #CREInvestment #EconomicOutlook #MarcRetailGuy

Retail Real Estate 2026: Why Some Properties Stay Strong While Others Struggle

By Marc Perlof • February 2, 2026
Retail Real Estate 2026: Why Some Properties Stay Strong While Others Struggle By Marc Perlof | MarcRetailGuy February 2, 2026 If you own retail real estate, here is what just changed. Retail real estate in 2026 is no longer one market. It has split into clear winners and clear losers. Owners who understand this are protecting value. Owners who do not are feeling pressure. The biggest change is how people spend money when things feel uncertain. Interest rates are higher. Costs are up. Households are more careful. That shift shows up first at the property level. Some retail feels stress faster than others. Lifestyle centers, nightlife areas, entertainment districts, and tourist retail depend on optional spending. When people cut back, visits drop. Sales slow. Tenants push back on rent. Vacancies last longer. This is not a crash. It is a pressure issue tied to spending people can delay. Other retail performs differently. Grocery anchored centers, pharmacies, medical and dental, quick-service food, auto service, and personal care are built around daily habits. People cut wants before needs. That makes income steadier and easier to support in a cautious market. Recent retail market reports show this split clearly. National retail vacancy stayed fairly stable through late 2025, mostly in the mid-5 percent to high-6 percent range, with necessity-based centers performing better than discretionary locations¹. Leasing slowed in 2025, with longer decision times and more rent pushback, especially from non-essential tenants². Buyers are still active, but they are more careful. They now focus on tenant quality, lease length, and operating costs more than rent growth³. What retail owners should focus on right now • Daily-needs tenants reduce risk. Properties with grocery, medical, pharmacy, and quick-service food see more stable rent and fewer concession requests. That helps protect sale price and lender support in slower markets¹. • Grocery-anchored centers sell faster. Buyers still want these assets because traffic is predictable and costs are easier to pass through. These deals tend to fall apart less often³. • Discretionary retail carries pricing risk. Properties tied to optional spending face longer vacancies, rent resistance at renewal, and wider gaps between buyer and seller pricing. Waiting too long to adjust can hurt value, not just cash flow². One thing is becoming clear in early 2026. The market is not pricing retail as one category anymore. It is pricing risk. Two properties with the same income can be worth very different amounts based on tenant mix, lease terms, and rising expenses. Owners who understand this protect equity. Others only see the gap after a buyer or lender points it out. The takeaway is simple. Retail real estate in 2026 is about quality, not hype. Stable income matters. Lease terms matter. Tenant mix matters. Insurance and operating costs matter. Owners who match strategy to how their tenants actually perform stay in control. Owners who rely on old assumptions end up reacting. If you want a clear, property-specific review of how buyers and lenders would view your retail asset today, I can prepare a short market positioning summary. No templates. No guesses. Just how your property would really trade in this market. Ask yourself this. Is your property built around spending people can delay, or spending they rely on every week? #RetailRealEstate2026 #RetailMarketOutlook #EssentialServicesRetail #GroceryAnchoredRetailCenters #DiscretionaryRetailProperties

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • January 30, 2026
Smoothie King plots 90-plus new openings for 2026 The world’s largest smoothie franchise isn’t planning on slowing down its growth after a strong 2025.  Smoothie King says it plans to open more than 90 new store openings in 2026, in addition to launching a targeted franchisee incentive program spanning several key states, including Arizona, Illinois, Massachusetts, Michigan, Pennsylvania, Virginia and more. Through the program, Smoothie King says it is offering financial incentives to “growth-minded franchisees,” designed to accelerate brand awareness and density in these markets...

Retail Real Estate in 2026: What Commercial Owners Need to Know Right Now

By Marc Perlof • January 26, 2026
By Marc Perlof | MarcRetailGuy January 26, 2026 If you own retail real estate, here’s what just changed for you. 2026 is shaping up to be a year where retail property owners need to pay attention. Not to fear. Not to headlines. To real signals in the market. There is more global and domestic uncertainty right now. Conflicts overseas, trade tension, higher government debt, and political changes in the U.S. all affect interest rates, insurance markets, and investor behavior. This does not mean panic. It means owners need clear, reliable information. Here is where the retail market stands today. Local retail remained steady through late 2025. In Los Angeles County, vacancy ranged from about 5.6 to 6.9 percent in the second half of the year¹²³. That tells us demand is still healthy, even as some tenants adjust space needs or renew leases at new rent levels. Leasing activity slowed in some areas. Spaces are taking longer to fill, and asking rents softened slightly as owners and tenants reset pricing². This is a normal market adjustment, not a collapse. On the investment side, commercial real estate transactions increased nationally through mid 2025. Both the number of deals and total dollar volume rose, showing capital is still moving⁵. Buyers are active when pricing reflects today’s risks and returns. This is exactly what I am seeing in live pricing discussions and negotiations right now. Insurance remains one of the biggest issues for retail owners. Property insurance markets became more stable in 2025, and rate increases slowed in some areas. However, insurers are still selective. Coverage terms matter more than ever, especially for properties exposed to wildfire or coastal risk⁴. Insurance costs directly affect net income, lease negotiations, and buyer interest. Retail Outlook for Q1 and Q2 2026 In early 2026, the retail market is likely to stay steady but measured. Vacancy is expected to remain near current levels. Leasing will be deliberate, not rushed. Rents should hold close to where they ended in 2025 as owners and tenants continue to agree on realistic pricing. Capital will remain active for properties with solid income, strong tenant credit, and durable lease terms. Buyers are selective, but they are still moving forward when risk and return are properly aligned. Insurance markets will stay selective in the first half of 2026. Owners need to plan renewals carefully and understand how insurance affects operating costs, tenant negotiations, and future sale value. Here is a simple retail risk check for 2026: • Local vacancy around 6 percent, stable but uneven by location¹ • Leasing takes longer than peak years, making pricing discipline critical² • Capital remains active, but underwriting is conservative⁵ • Insurance coverage is improving in some areas, but terms still matter⁴ Not all retail performs the same. Discretionary-driven destinations like lifestyle centers, nightlife districts, and tourist-focused shopping streets feel more pressure when consumer spending slows. Retail that serves daily needs and essential services tends to perform better during uncertain cycles. The best strategy now is disciplined and data-driven. Focus on tenant credit strength. Protect lease term and income stability. Price based on real market data. Understand insurance risk clearly. This is how value is protected in changing markets. I help retail property owners position assets based on real tenant behavior and real buyer demand. Not headlines. Call or DM me if you want a clear view of how your retail property should be positioned for 2026. How will you adjust your leasing or investment strategy this year based on what the market is actually telling us? #RetailRealEstate #LosAngelesCRE #CommercialRealEstateOutlook #RetailInvestment #CRE2026 #MarcRetailGuy
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