Jerome Powell's Insider Tips: Best Time to Sell Retail Space Unveiled!
Marc Perlof • March 7, 2024
Hey Retail Real Estate Rockstars! Let’s jump into some cool stuff that’s happening in the world of money and business, especially for those of us who own retail real estate. We're mixing together some smart words from Jerome Powell, the big boss at the Federal Reserve from a 60 Minutes interview that took place on February 1, 2024, and the testimony that took place today, March 6, 2024. Here’s what’s going on and why you should care:
From the Federal Reserve's Report (March 6, 2024):
- Economy is Booming: Last year, the economy grew by 3.1% thanks to people buying lots of stuff. This is great news for us because when people spend money, retail gets busy, and we make more money.²
- Jobs Everywhere: Unemployment is super low at 3.7%, meaning most people have jobs and money to spend on retail goods and services.²
- Prices Getting Better: Things have been pretty expensive because of high inflation, but the good news is, prices are starting to go down.² This means it might cost our tenants less to run their stores, and people might start buying more because things aren't as pricey, thus asking rents might increase.
And, from Jerome Powell on 60 Minutes (February 1, 2024):
- Inflation Cooling Down: Inflation dropped from a high of 9% to about 3%, which means things aren’t getting expensive as fast as they were before.¹ This is good for us, our retail tenants and their customers.
- Interest Rates on Pause: The Fed isn’t planning to change interest rates right now. They want to make sure everything stays stable before they make any moves.¹ This is important for us when we think about the next step for our properties. But it doesn’t mean the Fed is going to wait for inflation to be exactly at 2%.
- Strong Economy: With lots of jobs and a strong economy, people have more money to shop, which is amazing for our retail spaces and tenants.¹
- There might be a rate decrease of ¼ to ½ point in the Federal Funds rate in June 2024 and then a pause from there.
All this information points to a pretty stable time for those of us in retail real estate. Whether you're thinking about selling, buying more, or just making your current spaces better, things are looking up.
If you’re figuring out what to do with your retail properties and want some advice, let’s connect. Call, Text, or DM me for more info.
With all these updates from Jerome Powell and the Fed, how can you use this information to make smart moves with your retail properties in the next few months?
#RetailRealEstate #SmartInvesting #MarcRetailGuy #EconomicUpdate #PropertyGoals #FinanceSavvy
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Cherished Malibu Seafood Shack The Reel Inn May Rebuild After State Reversal  Malibu’s one-of-a-kind seafood spot, The Reel Inn, may once again serve its signature fish puns and fried and grilled platters on Pacific Coast Highway after the state reversed its earlier position that blocked the restaurant’s return, according to Eater LA...
Hey, Retail Real Estate Rockstars! The Big Beautiful Bill (H.R. 1) has completely changed the rules for State and Local Taxes (SALT), which is great news for any property owner who has ever cringed when they see their tax bill. For those of you investing in retail real estate, this is the kind of victory that calls for a double espresso and a fresh pro forma. We're talking about actual tax relief in 2025. Let's dissect it. What Just Happened? The SALT deduction cap, once stuck at $10,000 per household, has officially increased to $40,000 for joint filers and $20,000 for single filers — but only between 2025 and 2029. After that, it’s back to the old cap unless Congress re-ups¹. Important Clarification for Property Owners While the IRS frames the new SALT cap in terms of individual filers ($20,000 single / $40,000 joint), the impact depends on how your retail property is owned: LLCs, Partnerships, and S-Corporations (Pass-Throughs): Income, expenses, and property taxes flow through to the owners’ personal returns. The higher SALT cap allows greater deductions here, boosting post-tax cash flow for the individual owners. Trusts & Estates: Similar pass-through treatment, meaning beneficiaries or trustees may capture the benefit depending on structure. C-Corporations: The SALT cap generally doesn’t apply, since corporate taxes are calculated differently and deductions follow corporate rules. REITs (Public or Private): REITs have their own tax regime, but shareholders who receive pass-through income may benefit at the individual level. Direct Individual Ownership: If you hold the property in your own name, property taxes fall directly under the SALT deduction rules. If you live in a high-tax state like California, New York, or New Jersey, this means you can deduct a lot more of your state income, property, and local sales taxes on your federal returns. Why Retail Property Owners Should Care More Deductible Property Taxes You can lower your taxable income on your federal return by deducting a larger portion of your high property taxes on retail assets. Boosts Post-Tax Cash Flow Increased deductions = less tax paid = more cash in your pocket. Offsets Reassessment or NNN CAM Spikes With inflation and property tax reassessments squeezing margins, this SALT cap increase gives you some room to breathe¹. Attractive to High-Income Buyers New investors seeking tax efficiency may find your retail property more alluring if you offer larger deductions. Strategic Planning Window: 2025–2029 These changes expire after 2029, so use this window wisely — structure sales, 1031 exchanges, or renovations when you can best leverage the deduction bump¹. Real Data, Real Impact The original SALT cap from the 2017 Tax Cuts and Jobs Act was projected to cost Californians alone over $12 billion in lost deductions annually². Nearly 30% of households in high-cost areas maxed out the previous SALT deduction limit². What About NNN Leases? Here’s the twist: if your property is on a triple-net (NNN) lease, your tenants — not you — pay the property taxes. For Landlords: The SALT cap change doesn’t directly benefit you, since you aren’t the one writing the property tax check. For Tenants: They may be able to deduct more of those property taxes on their federal returns, depending on how their business or personal tax filings are structured¹. Smart Move: Share this info with your tenants. Suggested Subject Line for Tenant Email: “You May Benefit from New Tax Deduction Rules (H.R. 1)” A simple note saying, “The new federal tax law (H.R. 1) increased the SALT deduction cap for 2025–2029. Since you pay property taxes under your NNN lease, this may be relevant for your tax planning. Please confirm with your CPA.” That small gesture positions you as knowledgeable, supportive, and proactive — which builds goodwill and strengthens tenant relationships. If you’re considering a sale, refinance, or exchange between now and 2029, let’s talk strategy while this deduction window is wide open #RetailRealEstate #CommercialRealEstate #TaxStrategy #SALTdeduction #PropertyOwners
The Iconic Reel Inn Malibu To Say Goodbye After 36 Years Plans to resurrect The Reel Inn Malibu after the Palisades Fire have been shelved following a decision by the California Department of Parks and Recreation not to renew the restaurant’s lease, as reported by The Wall Street Journal. The move effectively closes a 36-year chapter for the 144-seat seafood shack on Pacific Coast Highway, long recognizable for surfboards on the walls, clever signage, chalkboard menus, and the relaxed Malibu customers...
