From Ashes to Action: The Surprising Rise of Retail Real Estate!

Marc Perlof • April 22, 2024

Hey, Retail Real Estate Rockstars! Let's dive deep into the current surge in retail real estate, proving to be the phoenix rising from the ashes of negative headlines. With insights from the economic gurus, Christine Cooper and Rafael De Anda of CoStar News, we've got a crystal-clear picture of why retail spaces are turning heads again.

 

Interestingly, even though some stores are closing and going bankrupt, the retail real estate market is doing quite well. This situation might seem strange, but it actually offers a unique perspective for those looking to get a better grasp of today's economy. For people who own retail real estate, paying attention to the economy and understanding what shoppers want can really help them find success and make smart choices with their investments. 


Consumers Continue To Carry the Economy

 

The economy started 2024 on a strong note, mostly because people are spending more money. Even though prices are high and people are dealing with more debt, folks still feel pretty confident about their financial situations. The economy is expected to grow between 2% and 2.5% during the first quarter of the year. This good start comes after a strong end to last year, where the economy grew faster than originally thought—up to 3.4% in the last quarter of 2023. Also, people spent 0.8% more in February compared to January, and this spending was almost 5% higher than the same time last year. [1].

A graph showing consumption and income keep growing

Retail real estate is significantly impacted by this consumer-driven expansion, which highlights how crucial it is to comprehend and respond to these economic cues. Owners of retail properties should remember the following:

 

  • Consumer Confidence is Key: People are spending more money these days, partly because the stock market is doing well, with a 10% increase. This boost in the market makes people feel wealthier, so they are visiting stores more often and spending more money there.

  • Shift Towards Services: People are spending a lot more money on services now, which shows that their preferences are changing. They are particularly spending more on fun things like entertainment and travel. Because of this, places that sell these kinds of services or are near them might see more customers coming in. 

  • Automobile Sales and Beyond: The 3.9% increase in spending on cars and car parts in February shows that people are willing to spend more on both products and services. This trend could be good for stores that sell things related to cars or help improve them.

 

For those investing in retail real estate, it's important to understand the bigger economic picture. A strong job market supports steady consumer spending. In the past three months, there have been, on average, 265,000 new jobs added each month, and wages have been growing by at least 4% each year. However, investors should also watch for changes in interest rates, which are controlled by the Federal Reserve, as these can affect the economy too. [1]

 

The economy right now has both opportunities and challenges for those who own retail real estate. To do well in this constantly changing environment, owners need to use a smart plan that's based on the latest economic information and a deep understanding of what consumers want. Whether you're planning to buy, sell, or update properties, aligning your strategies with these economic trends can really pay off. 


Call or DM me for more information on leveraging these insights to optimize your retail real estate portfolio.


With the retail real estate market looking good because people are spending more and interest rates might change in June 2024 or September 2024, how can property owners use these changes to their advantage?

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • March 20, 2026
Santa Monica Airport Conversion Project Unveiled By City SANTA MONICA, CA — Following a nearly two-year public engagement process, the city has released a draft Framework Diagram for the Santa Monica Airport Conversion Project. "The Framework Diagram brings many ideas together to find common ground about what should go where and what types of uses belong in different areas of the site," the City of Santa Monica explained in a March 11 news release....

How Rising Oil Prices and Job Losses Could Affect Retail Property Values in 2026

By Marc Perlof • March 16, 2026
By Marc Perlof | MarcRetailGuy CA #01489206 March 16, 2026 If you own retail real estate, here’s what just changed for you. Retail property owners are asking a simple question today. Is the market about to change? Several economic signals moved quickly over the past two weeks. Oil prices surged as conflict disrupted major energy supply routes. The U.S. job market also weakened unexpectedly during the same period. Financial markets have become more volatile as investors reassess economic risks. When oil prices rise and hiring slows, real estate investors begin adjusting risk assumptions. These adjustments often appear first in lender loan standards and buyer pricing. For retail property owners, these shifts can influence demand and property values. Owners of strip centers, shopping centers, store front retail, and NNN retail properties (multi-tenant and single tenant) should watch closely. Understanding these signals early can help protect property value and guide decisions. Market Analysis and Trends Energy markets reacted first. Brent crude oil recently surged above $100 per barrel. The increase followed conflict disrupting shipping routes and global oil supply.¹ Much of the concern involves the Strait of Hormuz shipping corridor. Roughly 20 percent of global oil supply normally passes through this route. Even small disruptions there can quickly affect shipping costs and supply chains.¹ Consumers often feel the impact through gasoline prices. Since late February, U.S. gasoline prices increased more than 15 percent. Prices reached roughly $3.47 per gallon in early March.¹ In Southern California, fuel prices are usually among the highest nationally. Drivers in the region are already paying significantly more at the pump. Higher fuel costs can quickly strain household budgets. This often reduces spending at restaurants and other nonessential retail businesses. The labor market also signaled caution. The U.S. economy lost about 92,000 jobs in February 2026. Unemployment rose to approximately 4.4 percent during the same period.² Slower hiring typically leads to reduced consumer spending several months later. When advising retail property owners, I track three important property risks. These include tenant margin pressure, lender loan standard changes, and buyer cap rate expectations. Key signals retail property owners should monitor include: Brent crude oil moving above $100 per barrel during Middle East supply disruptions.¹ U.S. gasoline prices rising more than 15% since late February.¹ The U.S. economy losing roughly 92,000 jobs in February while unemployment increased.² Essential Retail vs Nonessential Retail Retail categories respond differently during periods of economic stress. Essential retail includes grocery anchored centers, pharmacies, and daily service tenants. These businesses usually remain stable during economic disruptions. Consumers still need basic goods even when household budgets tighten.³ Nonessential retail categories are more sensitive to economic pressure. Restaurants, entertainment venues, and similar tenants often experience softer sales first. This usually happens when consumers reduce spending. For property owners, tenant mix becomes especially important during economic uncertainty. Centers anchored by essential tenants often remain more stable. Properties dominated by nonessential retail may experience greater sales volatility. Strategic Advice for Retail Property Owners Economic uncertainty is a good time to review several property fundamentals. 1. Review tenant stability Evaluate tenant sales performance, credit strength, and upcoming lease expirations. 2. Monitor capital markets Lenders and investors may begin tightening loan standards as risks increase. 3. Evaluate sale timing carefully Markets sometimes offer short windows before buyer pricing adjusts to new conditions. Even a 1/4% to 1/2% increase in cap rates can affect property values. For example, a $6 million retail property valued at a 6% cap rate generates about $360,000 in annual income. If buyer expectations move to a 6.5% cap rate, value could fall near $5.5 million. If you own retail property and are wondering how these economic signals could affect buyer pricing or cap rates for your asset, this is exactly the type of analysis I help owners evaluate before making a sale or hold decision. If investor cap rates in your market moved just 1/2% higher, how much would the value of your retail property change? Investor Behavior During Uncertain Markets Market volatility often changes how investors evaluate retail properties. Research shows that investors prefer assets with stable income during uncertain periods. Properties with strong tenants and longer lease terms usually attract the most buyer interest.³ Assets with predictable cash flow often perform better during market uncertainty. Properties with weaker tenants or short lease terms may face greater scrutiny. For retail property owners, tenant quality and lease structure matter even more in volatile markets. What This Means for Retail Property Owners Retail property values depend on more than location. Energy prices, employment trends, and capital markets also influence buyer demand. If oil prices stay elevated and hiring slows, investors may become more selective. Properties with weaker tenants or short lease terms may see pricing pressure first. Well located shopping centers with strong tenants and long leases usually remain more resilient. Owners who monitor these signals early often have more strategic options. If economic uncertainty continues over the next twelve months, how strong are the tenants in your retail property? #RetailRealEstate #CommercialRealEstate #NNNProperties #ShoppingCenters #RetailPropertyOwners #CREInvesting #RealEstateInvestors #CREMarketInsights #RealEstateTrends #CaliforniaRealEstate #LosAngelesRealEstate #CapRates

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • March 13, 2026
US consumer inflation steady before Iran conflict drives up oil prices WASHINGTON, March 11 (Reuters) - U.S. consumer prices rose moderately in February as rents maintained a steady pace of increases, though households paid more for gasoline and at the supermarket and higher costs are in store because of the escalating war in the Middle East .  The Consumer Price Index report from the Labor Department on Wednesday, which also showed underlying inflation muted ​last month, covered the period before the U.S. and Israel launched strikes against Iran. The attacks at the end of February were met with retaliation by Tehran and have boosted oil prices...
More Posts