Wednesday, March 6, 2024
By: Marc Perlof
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?
Sources:
1. "Chairman Powell; A Hole in the System; The Mismatch | 60 Minutes Full Episodes" Jerome Powell shares his thoughts on money, business, and keeping prices stable.