The U.S. can’t pay its bills? What That Really Means for Your Retail Property Value
Marc Perlof • April 6, 2026
By Marc Perlof | MarcRetailGuy
CA #01489206
April 6, 2026
If you own retail real estate, here’s what just changed for you.
The U.S. is not running out of money. But debt is rising and keeping interest rates higher. That is already pushing down retail property values. Higher government debt is keeping borrowing costs high, and that lowers your property value.
What Changed
What is happening?
A recent article from Yahoo Finance claims the U.S. is “insolvent” based on Treasury data.¹ The idea comes from comparing what the government owes to what it owns.
What is causing it?
The U.S. keeps spending more than it collects. Total debt keeps growing. At the same time, interest rates have gone up. That makes it more expensive for the government to borrow money.
This does not mean the U.S. cannot pay its bills. It means the system is under pressure. That pressure affects interest rates across the economy.
Why It Matters (Value Impact)
How does this affect your property value?
Retail property values are tied to income and cap rates. Cap rates follow the 10-year Treasury. When government debt keeps rates higher, cap rates stay higher.
Higher cap rates mean lower property values.
How are buyers underwriting this today?
Buyers are using higher borrowing costs in their numbers. They are also assuming they will sell at higher cap rates later. That lowers what they can pay today.
What happens if rates stay high?
Your income becomes more exposed. Expenses like insurance and maintenance keep rising. If rent does not keep up, your net income drops. Lower income plus higher cap rates equals lower value.
Strategic Advice for Retail Property Owners
What should you do right now?
Base decisions on today’s borrowing costs. Not past pricing. If you are selling, price to current cap rates. If you are holding, protect your income.
What should you review in your lease?
Look closely at what expenses you can pass through. Insurance, CAM, and repairs matter more now. If your lease does not fully protect your income, your value is already exposed.
What should you prepare for?
Plan for rates to stay higher longer. Build in margin for higher costs and slower leasing. Do not rely on rate cuts to fix your deal.
Real Deal Insight
Buyers are pricing retail deals today based on current debt costs and higher cap rate assumptions.
A recent strip center owner in Southern California expected pricing based on a 5.25% cap rate from prior comps. Today, buyers are underwriting closer to 6.25% to 6.75% due to higher debt costs and exit assumptions.
On a $1,000,000 NOI:
- At 5.25% cap → value ≈ $19.0M
- At 6.50% cap → value ≈ $15.4M
That is a ~$3.6M difference, without any change in income. This is the gap sellers and buyers are working through right now. Deals are getting done, but only when pricing reflects today’s cap rates and financing reality.
Market POV
Pricing is a moving target right now.
If you are thinking about selling or completing a 1031 exchange in 2026, looking at your property’s value sooner rather than later is optimal.
Waiting for rates to drop may not bring values back to prior peaks. Buyers are already adjusting to a higher rate environment, and pricing is resetting in real time.
Owner Self-Assessment
If you had to sell today, would your current income support today’s higher cap rates?
Market Data and Sources
- U.S. federal debt is over $34 trillion and continues to grow.²
- Interest on that debt is now one of the largest government expenses.³
- The 10-year Treasury has been around the 4% range, well above prior lows.4
This shift is already showing up in pricing across Los Angeles retail deals today, and it is changing how buyers and sellers are negotiating in real time. If you own retail real estate in Los Angeles or Southern California, this is already showing up in pricing, negotiations, and deal structure across strip centers, shopping centers, and NNN assets.
If you own retail real estate, I can show you what your property is worth today based on current cap rates, buyer demand, and real underwriting.
Call or DM me for a current value analysis.
What happens to your property value if cap rates increase 0.5% to 1.0%?
Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide.
#RetailRealEstate #NNNProperties #CapRates #CommercialRealEstate #RetailInvesting #LosAngelesRealEstate #CREMarket #InvestmentProperty #StripCenters #ShoppingCenters #RealEstateStrategy
Sources
¹ Yahoo Finance, “Treasury just declared the U.S. insolvent,” 2026
² U.S. Department of the Treasury, Fiscal Data, 2025
³ Congressional Budget Office (CBO), Budget Outlook 2025–2035
⁴ U.S. Treasury, Daily Treasury Yield Curve Rates, 2025–2026
Disclaimer
This post is for information only. It is not legal, tax, or financial advice. Always check with a licensed professional before making decisions.
© 2026 Marc Perlof Group. All rights reserved.
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
CPI surged in April as inflation soars to highest level in almost 3 years Inflation accelerated in April to an annual rate of 3.8%, the highest since May 2023, as the Iran war pushed up energy costs and raised prices across the economy. By the numbers Economists predicted inflation would jump to 3.7% on an annual basis, up from the 3.3% reading in March, according to a FactSet poll.
By Marc Perlof | MarcRetailGuy CA #01489206 May 4, 2026 If you own retail real estate, here’s what just changed for you. Pricing your retail property is not about picking a number. It is about choosing the right strategy to drive buyer demand and maximize your final sale price. If you use the wrong approach, you limit your buyer pool and your outcome. Retail property pricing has become more strategic. Buyers are more selective and move quickly when deals are positioned correctly. Properties that are not positioned well are being ignored. What is causing it? Higher interest rates and rising operating costs have made buyers more disciplined. At the same time, demand still exists for well-located assets, especially in Southern California. This creates a gap. Strong deals get attention. Weakly positioned deals sit. How does pricing affect your property value? Pricing determines how many buyers engage. More buyers create competition. Competition drives stronger offers and higher pricing. If your property attracts only one buyer, that buyer controls the negotiation. If multiple buyers engage, you control the process. How are buyers responding today? Buyers are prioritizing deals that feel well positioned from the start. If pricing creates hesitation, they move on quickly. If pricing creates opportunity, they act. What should you do right now? Start by understanding that pricing is a strategy, not just a number. Different approaches create different outcomes depending on your asset and buyer pool. What should you focus on? Match your pricing approach to your property. A stabilized NNN asset, a strip center with upside, and a redevelopment site should not be brought to market the same way. Buyers are actively pursuing deals that feel correctly positioned and ignoring those that feel priced without strategy. There are several ways to bring a retail property to market, including an exact asking price, pricing guidance, request for offers, submit offers, and off-market sales. Each approach attracts a different buyer mindset and leads to a different outcome. In retail real estate and select commercial opportunities, including development sites, pricing strategy plays a direct role in the final outcome. Pricing controls demand. Demand controls price. In the next three weeks, I will break down how each pricing strategy works and when to use it. Start with “Should You List Your Retail Property With an Asking Price?” (Part 2) , where I explain when pricing helps and when it hurts your result. If you listed your property today, would your pricing strategy attract multiple buyers or just one? Call or DM me for more information. If pricing drives demand, are you using the right strategy for your property? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CommercialProperty #NNN #StripCenters #ShoppingCenters #CRE #LosAngelesRealEstate #InvestmentProperty #PropertyValue
