LA Cities in Crisis: How Budget Cuts Put Retail Real Estate Risk Front and Center

Marc Perlof • September 29, 2025

Hey, Retail Real Estate Rockstars!


City deficits are the hidden NOI risk most retail property owners aren’t watching. When cities go broke, service cuts, fee hikes, and tenant stress follow and that hits your bottom line. Let’s take a closer look.


Cities Under Pressure

  • Los Angeles faces a $1B deficit for FY 2025–26. Over 1,600 job cuts may slow permitting and inspections¹.
  • Santa Monica declared fiscal distress from $229M in settlement costs². Expect higher property taxes and fees.
  • Inglewood reports a $24M deficit with small retailers hurt by event-day traffic near SoFi and Intuit Dome³.
  • Beverly Hills looks stable today but is projecting $15–20M annual deficits soon⁴.
  • Long Beach faces a $60.5M five-year shortfall, with permit and inspection fees already rising⁵.


Why This Matters

When cities are broke, retail property owners feel it:

  • Cuts in police, fire, and street services can lower safety and curb appeal.
  • Higher taxes and fees raise tenant costs, making rent harder to collect.
  • Slower city approvals drag out leasing and redevelopment projects.
  • Struggling small businesses mean more vacancies and turnover.

For retail property owners, the real story is what this means for your bottom line. 


Rising city fees cut into tenant margins, which makes collecting rent harder. Service cuts and safety concerns lower customer traffic, reducing sales and weakening your rent roll. And when NOI drops, property values follow — meaning your asset could trade at a discount if you don’t stay ahead of these shifts.


Redevelopment and Highest-and-Best Use

If you’re holding property for redevelopment, city budget stress can make the process harder. Expect higher fees, slower approvals, and possible new costs tied to zoning. At the same time, weaker tenants can hurt your interim cash flow. But here’s the opportunity: budget stress can lead to discounted property sales and even city incentive programs. Smart investors who plan for longer timelines and extra costs can still win big.


Key Data Points

  • Los Angeles: ~$1 billion projected deficit for FY 2025-26¹.
  • Santa Monica: $229 million settlement liabilities².
  • Long Beach: $60.5 million shortfall over five years⁵.


Now is the time to stress-test your leases, evaluate tenant strength, and model rising costs. If you wait until the fee hikes hit, it’s too late.


Call or DM me today. Let’s make sure your property is protected and positioned to grow in this shifting market.


What do you think, can city budget problems be the hidden risk most retail property owners aren’t watching closely enough?


#RetailRealEstate #LosAngelesCRE #PropertyInvestment #CommercialRealEstate #LACounty


Footnotes & Sources

  1. ABC7 – LA faces $1B deficit, layoffs possible
  2. LA Times – Santa Monica financial crisis
  3. 2UrbanGirls – Inglewood $24M budget deficit
  4. Beverly Press – Beverly Hills council budget report
  5. Long Beach Local News – $20M shortfall, structural deficitems.

Disclaimer

This post is for information only. It is not legal, tax, or financial advice. Always check with a licensed professional before making decisions.




© 2025 Marc Perlof Group. All rights reserved.

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • May 22, 2026
Retail Real Estate Leaders Brace for Inflation Risks Retail real estate professionals arrived at ICSC Las Vegas this week with leasing momentum still intact, but economic anxiety creeping into conversations across the industry’s biggest annual gathering. Executives interviewed by CoStar News said resilient consumer spending and active retailer demand continue to support the sector, even as inflation, fuel prices, and global instability cloud the outlook for the second half of 2026...

When to Sell a Retail Property Without an Asking Price

By Marc Perlof • May 18, 2026
By Marc Perlof | MarcRetailGuy CA #01489206 May 18, 2026 If you own retail real estate, here’s what just changed for you. In some situations, removing the price can lead to stronger offers. This approach allows the market to determine value instead of limiting it upfront. When used correctly, it can create competition and improve your outcome. More retail properties are being marketed without a price. Brokers are using offer-driven strategies to let buyers compete based on their own assumptions. What is causing it? Differences in buyer expectations and uncertainty in valuation are driving this shift. In many cases, investors and developers value the same property differently, especially when there is upside or redevelopment potential. How does removing the price affect your value? Removing the price can eliminate the ceiling. Buyers are not anchored to a specific number, which can lead to stronger offers when demand is present. When multiple buyers are involved, this approach can create competition and push pricing higher. What is the risk? If demand is limited, offers may come in below expectations. This often happens when the buyer pool is thin or when the property has uncertainty, such as a short lease term, tenant risk, or redevelopment challenges. When should you use Request for Offers? Use it when there is strong demand and the property is expected to attract multiple buyers. Even in these situations, active buyers and brokers will often ask for pricing guidance or a whisper price to understand where the seller expects the deal to trade. When should you use a more flexible approach? Use submit offers when you want flexibility and are testing the market. This approach allows you to respond to buyer feedback while still maintaining control of the process. Some properties are marketed without a price because the broker does not have a clear view of value. That is not the same as a strategy. When used correctly, removing the price is intentional and supported by buyer demand, positioning, and a defined process. Without that structure, it can create confusion and weaker results. We are seeing strong assets generate multiple offers with this approach, while weaker deals struggle to gain traction without pricing guidance. This strategy is not about avoiding a price. It is about allowing the market to define it when the conditions support it. If you need context, review Part 2: “Should You List Your Retail Property With an Asking Price?” In next week’s final article, read “How Strategic Underpricing Can Increase Your Retail Property Sale Price” (Part 4) , including one approach many owners overlook. If you are considering an offer-driven strategy, reach out before going to market. I will help you determine if your property can support it and how to structure it properly. Call or DM me for more information. Would removing your price increase your value or create uncertainty? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CRE #InvestmentProperty #CommercialBroker #LosAngelesRealEstate #NNN #RetailInvesting #PropertySales

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By Marc Perlof • May 15, 2026
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