Ride the Rate Hike Wave: Discover the Fed's Next Move and Your Retail Real Estate!

Marc Perlof • October 9, 2023

Hey, Retail Real Estate Rockstars! The recent jobs report has stirred the waters in the financial realm, paving the way for another potential interest rate hike by the Federal Reserve by year's end. The nonfarm payrolls surged by 336,000 last month, maintaining the unemployment rate at a stable 3.8%. Moreover, wages have been advancing at a modest pace, marking a slight increment of 0.2% last month and 4.2% over the year, the smallest annual rise since 2021 ¹ . The robust labor market signals an economic reacceleration, catching the keen eye of the Fed. Here’s a breakdown of the unfolding scenario and its ripple effects on the retail real estate realm:


Interest Rate Hike on the Horizon: The jobs report has nudged the odds of a year-end interest rate hike from 48% to 56%, as per initial market pricing. This move stems from the Fed’s endeavor to keep inflation in check, which has soared well beyond the 2% target. The lingering concern is that an overheated labor market could fuel inflation even further.


Bond Market Dynamics: The bond market is already reacting to the anticipated moves by the Fed, with longer-term yields escalating. The yield on 30-year Treasury securities surpassed 5% recently, hitting a pinnacle not seen since 2007.


Market Reactions: The potential rate hike is a double-edged sword. On one hand, it's aimed at curbing inflation, but on the flip side, it could apply brakes on economic growth. Retail real estate owners should brace for impact as higher interest rates could potentially escalate borrowing costs, affecting property values and investment returns ² ³.


Retail real estate moguls, it’s time to strategize! Assess your portfolio, explore refinancing options, and consider locking in current rates before they ascend. Engage with financial advisors and retail real estate agents like myself to navigate the shifting tides and ensure your retail properties continue to shine bright in the market landscape.


As we venture into the last quarter, how are you gearing up to mitigate the impacts of a possible interest rate hike on your retail real estate portfolio?


Yahoo Finance: Fed Will Lean Toward Another Rate Hike After Blowout Payrolls¹

LinkedIn: How Fed Interest Rate Decisions Impact Real Estate Investors²

HLC Equity: How the Fed’s Interest Rate Hikes Impact Commercial Real Estate³


#RetailRealEstate #InterestRateHike #FederalReserve #EconomicTrends #RealEstateInvesting

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • October 31, 2025
Fed Cuts Rates Again, Boosting Confidence in CRE Recovery In a closely watched decision, the Federal Reserve cut its benchmark interest rate for the second consecutive month. The new target range of 3.75% to 4% reflects continued efforts to ease financial conditions and stabilize capital markets, even as economic signals remain mixed...

Will LA’s $30 Minimum Wage Reshape Retail Real Estate or Just Empty Storefronts?

By Marc Perlof • October 27, 2025
If you own retail real estate, here’s what might change for you. The hospitality workers’ union UNITE HERE Local 11 is pushing a bold new initiative to raise the City of Los Angeles $30 minimum wage for all city employees by July 1, 2028¹. While the first ordinance covered hotel and airport workers, the union’s latest ballot measure would extend this wage citywide². As an expert in retail real estate, here’s what that means for your properties. Higher wages will immediately impact tenant affordability and rent-to-sales ratio calculations that drive lease viability. Many retailers operate with payroll costs at 25 to 35 percent of gross revenue, leaving little cushion for a wage that’s nearly double the current state minimum of $16/hour³. When margins tighten, tenants face a choice: raise prices, cut staff, or negotiate rent. For landlords, that translates into valuation pressure because commercial property values depend on stable rental income. The small business impact in Los Angeles could be profound. Independent restaurants, boutiques, and service operators, the lifeblood of local shopping centers, run on razor-thin profits. If forced to meet a $30 wage, some may relocate to cities like Burbank or Glendale, where municipal wage laws are lower, or close entirely⁴. That shift could spark short-term vacancy spikes and longer lease-up periods. Still, there’s a possible upside. When low-wage workers earn more, they spend more locally. For well-positioned centers with necessity-based tenants: grocers, pharmacies, quick-service restaurants, rising wages could strengthen revenue resilience. Key takeaways for retail landlords: Audit tenant financial health and exposure to rising payroll costs. Review lease clauses that address operating-cost pass-throughs. Model new rent-to-sales thresholds under a $30 wage scenario. Track tenant retention and market-rent shifts across nearby cities. Prepare for valuation adjustments as cap rates reflect greater income volatility. If you own retail real estate in the City of Los Angeles, now’s the time to stress-test your portfolio. Let’s review your leases before this wage shift hits. Call or DM me for more information. When the $30 wage arrives, will higher pay strengthen LA’s consumer base or hollow out the city’s small-business retail core? #LosAngeles30MinimumWage #RetailRealEstateInLosAngeles #TenantAffordabilityAndRentToSalesRatio #SmallBusinessImpactLosAngeles #CommercialPropertyValuesLosAngeles

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • October 24, 2025
Toys"R"Us opening 10 flagships, 20 seasonal shops — here are all the locations The brick and mortar comeback of Toys"R"Us is moving into high gear ahead of the toy industry’s busiest season. In September, the retailer said that, in partnership with Go! Retail Group, it was planning to open 10 flagships and 20 seasonal holiday shops in the U.S. by year's end...
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