Should You Sell Now or Wait?

Marc Perlof • July 27, 2026

By Marc Perlof | MarcRetailGuy 

CA #01489206

July 27, 2026


If you own retail real estate, here’s what just changed for you.


Last week, we looked at how buyers actually evaluate retail properties. They look at income, leases, tenant quality, property condition, financing, future costs, and exit value. That brings us to the most important owner question in this series: should you sell now or wait?


This is not a simple yes or no decision. For some retail property owners, selling now makes sense. For others, waiting may protect value. For others, the right answer may be to lease vacant space, clean up property records and title concerns, fix property issues, or refinance. The key is to make the decision based on numbers, risk, and timing. Not emotion.


The Wrong Way to Make the Decision

Many owners ask, “What price can I get?” That matters, but it is not enough.

The better question is: what is the best decision based on my property, family goals, income, risk, tax position, debt, and long term plans?


A property may be worth selling even if pricing is not perfect. A property may be worth holding even if the market is active. The right answer depends on the facts.

This is also where the owner’s tax and reinvestment plan matters. Selling and cashing out may create liquidity, reduce management, and simplify life, but capital gains taxes, depreciation recapture, and state taxes can reduce the net proceeds. A 1031 exchange may allow an owner to defer taxes and keep more equity working, but it also requires finding a replacement property, meeting exchange deadlines, and adjusting to the new lifestyle.


The real question is not just, “What price can I get?” It is, “What do I keep after taxes, what do I do with the money, and am I better off after the sale?”


When Selling Now May Make Sense

Selling now may make sense if the property has strong current income and a buyer pool that still wants the asset. This is especially true if the leases are long term, tenants are strong, income is clean, repairs are limited, the location is desirable, and the owner wants to simplify, exchange, reduce management, or avoid future rollover risk.


Selling now can also make sense when the property is not fully stabilized, but the lease structure creates flexibility for the right buyer. Short term leases may scare off passive investors, but they can attract value add buyers, syndicators, developers, or owner users who want the ability to raise rents, retenant space, reposition the property, or plan for redevelopment.


Timing matters. A property with 10+ years of lease term may price much better for a passive investor than the same property with 3 years left. But a property with short term leases, below market rents, or future redevelopment potential may appeal to a different buyer pool. The key is knowing whether the short term lease structure is a weakness, an opportunity, or both.


When Waiting May Make Sense

Waiting may make sense if the property is not ready. If an owner has below market rents and can increase them, waiting may create value. If a vacancy can be leased, waiting may improve Net Operating Income (NOI). If records are disorganized, waiting may allow the owner to clean up the file before going to market. If a repair issue is scaring buyers, addressing it first may protect pricing. Waiting may also make sense if selling creates a tax problem and the owner does not have a clear 1031 exchange plan. But waiting is not automatically safe. Waiting has risk.


The Risk of Waiting

Owners often think waiting is neutral. It is not. Waiting can help, but it can also hurt. Risks include tenant rollover, vacancy, rent collection issues, higher insurance costs, higher repair costs, capital improvements, interest rate changes, buyer demand changes, lending pressure, new competing listings, and local market changes.


Some owners also wait because they believe the market will feel clearer after an election, after interest rates move, or after major global uncertainty settles. That may be reasonable, but it is still a bet. Elections, wars, tax law changes, and economic shocks can affect buyer confidence, capital flow, lending, and pricing. The market may improve, stay flat, or get worse. Waiting should be based on a clear reason, not just the hope that uncertainty disappears. A property can look stronger today than it will in 3 to 12 months. That is why waiting should be a strategy, not a default reaction.


The Financial Question Sellers Should Ask

Before deciding to sell or wait, owners should ask: what needs to happen for waiting to create more value? For example, assume a retail property has $250,000 of NOI and could sell today at a 6.50% cap rate. That value is about $3,846,154. If the owner waits and increases NOI to $275,000, but the market later prices the property at a 6.75% cap rate, the value is about $4,074,074. That is an increase of about $227,920. That may sound good, but the owner still needs to consider how much money was spent to create the higher NOI, how long it took, whether there was vacancy risk, whether tenant improvements and/or free rent were required, and whether market risk increased during the wait. Sometimes waiting creates value. Sometimes it creates more work for a small net gain.


Selling Now Versus Leasing First

Selling now with vacancy may attract value add buyers. The price may be lower, but the owner avoids leasing time, tenant improvement costs, commissions, carrying costs, contractor issues, delays, and the risk of choosing the wrong tenant.


That has its own value. Sometimes accepting a lower price and transferring the value add work to the buyer is smarter than spending months dealing with leasing, construction, negotiations, permits, and uncertainty. For those owners, peace of mind can have real internal value, even if it does not show up as a line item on the closing statement.


Leasing first may increase NOI and attract more buyers, but the owner needs to invest time and money before selling. The question is not just whether leasing increases value. The question is whether leasing increases value enough after costs, time, and risk.


Selling Now Versus Fixing Issues First

Some repairs should be handled before going to market. Others should be disclosed and priced into the deal. It depends on the issue. If a smaller repair removes a major buyer objection, it may be worth doing. If a larger repair is expensive and uncertain, the owner may choose to sell as is to a buyer who understands the work. Common items to review include roof, HVAC, parking lot, plumbing, electrical, ADA, environmental, structural issues, and deferred maintenance.


The goal is not to make the property perfect. The goal is to avoid surprises that create price cuts during escrow.


Selling Now Versus Refinancing

Some owners do not really want to sell. They want cash or liquidity. In that case, refinancing may be an option. But refinancing only works if the numbers support it.

The owner needs to review current NOI, loan amount, interest rate, debt service coverage, loan costs, prepayment penalty, future cash flow, property risk, and their current lifestyle. If refinancing creates tight cash flow, selling may still be the better decision. If refinancing gives the owner liquidity and allows them to keep a strong asset, holding may make sense.


The Decision Should Be Based on Net Outcome

Owners should not only ask, “Can I get a higher price later?” They should ask: will I be better off later after time, cost, taxes, risk, and effort? Sometimes the highest price is not the best outcome. A clean sale today may be better than chasing a slightly higher price with more risk. Other times, waiting 3 to 12 months may be smart if there is a clear path to improve income or reduce buyer concerns. The decision has to be specific to the property.


Final Thought

The question is not always, “Is now the perfect time to sell?” There is rarely a perfect time. The better question is, “What decision puts you in the strongest position moving forward?”


For some owners, that means selling now. For others, it means waiting. For others, it means leasing, fixing, refinancing, cashing out, or completing a 1031 exchange. The real risk is not selling or waiting. The real risk is making either decision without understanding how buyers, lenders, taxes, lease rollover, future repairs, and market timing affect the outcome. This concludes the Execution and Decision-Making series. The main takeaway is simple: understanding pricing is important, but execution, timing, and decision making determine the result.


If you are trying to decide whether to sell, wait, refinance, cash out, complete a 1031 exchange, or lease first, I can help you review the numbers and risks before you make a move.


Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide.


#RetailRealEstate #CommercialRealEstate #RetailInvestment #PropertyOwners
#RetailPricing #PricingStrategy #HoldorSell #CREStrategy #MarcRetailGuy


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.

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • October 23, 2026
How the ‘Walmart effect’ is major warning sign for the American economy Walmart may be the siren before an economic storm - at least that's what one financial expert believes. Economist Jim Paulsen calls his theory the "Walmart Recession Signal" (WRS). When Walmart's stock goes up and shares of luxury companies in the S&P Global Luxury Index go down, it's a sign that the country may be headed for a recession...

AB 2418: Can California AB 2418 Reduce Permit Delays That Hold Up Rent?

By Marc Perlof • October 21, 2026
By Marc Perlof | @MarcRetailGuy CA #01489206 October 21, 2026 If you own retail real estate, here’s what just changed for you. As of September 30, 2026, California has passed AB 2418,² a new law aimed at reducing certain delays in commercial plan checks and inspections. For retail property owners, that matters because every extra month a tenant waits for approvals can mean another month before the space opens and starts producing rent. AB 2418 applies statewide, including cities such as Los Angeles, Inglewood, Malibu, Santa Monica and more.¹ What Does AB 2418 Change? For qualifying commercial permit applications, cities and counties must provide an estimated timeframe for determining whether a complete application meets permit standards.¹ The law also creates another option when certain plan checks take too long. An excessive delay generally means the city takes, or says it expects to take, more than 30 business days to complete the first structural building safety plan check after receiving a complete application.¹ If the city returns the plans for corrections, the law also looks at the total review time. If the initial review plus the review of the corrected plans goes beyond 60 days , that can also qualify as an excessive delay.¹ If there is an excessive delay, the applicant can ask the city or county to use a private entity to perform the plan check. If the city cannot provide a qualified outside reviewer, the applicant may be able to hire an approved private professional and pay the cost directly. ¹ That professional must meet the law’s licensing and certification requirements. Does This Apply to Every Retail Tenant? No. This is an important limit. The private plan check portion of AB 2418 applies to qualifying tenant improvements in buildings that are generally: One to three stories No more than 40 feet to an occupied floor Group B Business occupancy Limited to an occupant load of 49 or fewer Not a health facility or public building¹ That means a typical Group M retail store should not assume it qualifies for the private plan check provision. However, AB 2418 includes another rule that can be more relevant to traditional retail. For certain completed commercial projects, local building departments must conduct an inspection within 10 business days after receiving notice that the permitted work is complete. This provision covers several occupancy groups, including Group B and Group M.¹ That could matter when construction is finished but a retail tenant is waiting for an inspection before it can move closer to opening. How Could Delays Affect Your NOI? A signed lease does not necessarily mean the owner is collecting rent. Assume a tenant will pay $10,000 per month once rent commencement occurs. If permitting or inspections push that date back by three months, the owner could have $30,000 of delayed rent, depending on the lease terms. During that period, the owner may still be paying taxes, insurance, utilities, debt service, and other property expenses. This is why permitting should be part of lease underwriting, not something considered only after the lease is signed. Why Should Medical and Dental Owners Pay Attention? Many professional office, medical, and dental uses may fall within Group B occupancy depending on the specific use, building, and patient conditions. That means AB 2418 may be more relevant to certain medical or dental tenant improvements than laws aimed specifically at traditional retailers. But owners should not assume a particular medical or dental project qualifies. The project's architect and local building department should confirm the occupancy classification and eligibility. What Should Retail Property Owners Do? Before signing a lease involving tenant improvements, confirm the property's occupancy classification and expected permit timeline. Review exactly when rent starts under the lease. If commencement depends on permits, construction, opening, or final approvals, delays can shift meaningful income into a later period. For projects that may qualify for AB 2418, ask the tenant's architect and local building department whether the new plan check or inspection rules could apply. The main owner decision is to understand the permitting risk before you agree to the final lease terms. Owner Self Assessment If your next tenant's opening is delayed by 60 or 90 days, how much rent and expense reimbursement would you lose before the property reaches its expected NOI? Final Takeaway AB 2418 may shorten certain commercial plan check and inspection delays, but owners need to understand which parts of the law actually apply to their tenant and property. If you're reviewing a lease, tenant improvement plan, or vacancy where permitting could delay rent, call or DM me. I can help you compare the expected downtime, income, and effect on property value before you make the decision. Sources ¹ California AB 2418 bill text and history ² Governor of California announcement Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #CaliforniaRetailRealEstate #RetailRealEstate #CommercialRealEstate #RetailProperty #AB2418 #RetailLeasing #CommercialPermits #TenantImprovements #PropertyOwners #CaliforniaRealEstate

Can Lease Guarantees Affect Your Retail Property’s Value?

By Marc Perlof • October 19, 2026
By Marc Perlof | @MarcRetailGuy CA #01489206 October 19, 2026 If you own retail real estate, here’s what just changed for you. Your property’s value may depend partly on who guarantees the rent, not just on the tenant’s name or current payment history. If the guaranty is weaker, shorter, or more limited than you think, it may affect your refinancing options, sale strategy, negotiating leverage, and expected proceeds. The main retail property owner decision is whether the property’s value is supported by verified tenant credit, strong underlying real estate, or a combination of both. What Owners Commonly Miss Many owners focus on the national brand, current rent, and remaining lease term. Those factors matter, but they do not tell you how much of your property’s value depends on the guaranty. Two properties may have the same tenant brand, rent, and lease term but different levels of support. One lease may be guaranteed by the national parent company. Another may be backed by a franchise operator, subsidiary, affiliate, smaller LLC, or individual. That does not automatically make one property good and the other bad. It means the owner should understand where the investment’s value comes from. If the guaranty is strong, buyers and lenders may place more confidence in the future rent. If the guaranty is limited or unclear, they may rely more heavily on the property’s location, market rent, replacement tenant demand, and the cost of a future vacancy. Before setting a value, refinancing, renewing the lease, or deciding when to sell, determine how much of your expected price depends on tenant credit. How Much of Your Property’s Value Depends on the Guarantee? A lease guaranty may support value by increasing confidence that the rent will continue through the remaining lease term. That support may be stronger when: The guarantor is financially stable The guaranty lasts through the lease term The obligations are not heavily capped or limited The tenant’s rent appears sustainable The location remains important to the tenant The guaranty may provide less support when it expires early, burns off, becomes capped, is released after an assignment, or comes from an entity with limited assets. The owner should also consider whether the lease can stand on its own without the guaranty. A long lease with above market rent may appear valuable while the tenant remains in place, but the property could face a different value if the tenant leaves and the space must be leased at a lower rent. This is why owners should separate two questions: How reliable is the current income? What is the property worth if that income changes or disappears? The stronger your answer to both questions, the more flexibility you may have when deciding whether to hold, refinance, renew, or sell. How Can the Guarantee Affect Pricing? Buyer behavior matters because it helps determine what your property may be worth in the market. Assume your property produces $250,000 in annual NOI. At a 6.00% cap rate, the indicated value would be approximately $4,167,000 At a 6.50% cap rate, the indicated value would be approximately $3,846,000 That is a difference of approximately $321,000 even though the NOI did not change. This example does not mean a weaker guaranty automatically creates a 50 basis point difference. It shows how a change in perceived income risk can affect pricing. If buyers view the guaranty as strong and dependable, they may accept a lower return. If they see more tenant credit risk, they may require a higher return, offer less, or place more weight on the real estate than on the lease income. Financing may also affect the result. Some lenders may be more comfortable with leases backed by financially transparent or stronger guarantors. If fewer buyers can obtain financing or become comfortable with the lease structure, competition may decrease. For the owner, the practical question is not simply what cap rate similar properties achieved. It is whether buyers will view your income as equally secure. What Protects Value If the Tenant Leaves? A strong guaranty can support value, but it should not replace an evaluation of the real estate. Your property may still hold value if it has: A strong location Rent below market Flexible building design Good visibility and access Strong replacement tenant demand Limited future capital needs Your value may face more pressure if the property has specialized improvements, above market rent, weak replacement demand, deferred maintenance, or a large amount of lease rollover risk. A future vacancy can create more than lost rent. It may also require tenant improvements, leasing commissions, free rent, repairs, demolition, or time to complete a new lease. Those costs can reduce NOI, increase capital needs, and affect net sale proceeds. The owner should understand whether the property is attractive because of the tenant, because of the real estate, or because both are strong. What Should Retail Property Owners Do Now? Confirm the exact tenant and guarantor. Do not assume a national brand means the parent company supports the lease. Review how long the guaranty lasts and what it covers. Determine whether it is full, capped, reduced, temporary, or affected by an assignment or ownership change. Evaluate the property without the current tenant. Estimate market rent, possible downtime, leasing commissions, tenant improvement costs, repairs, and replacement-tenant demand. That review can help you decide whether to: Sell while the current lease and guaranty remain attractive Seek stronger support during a renewal Refinance before the lease or guaranty weakens Hold because the underlying real estate remains valuable Adjust pricing expectations before going to market The goal is not to predict every future problem. It is to understand what supports your value before a buyer, lender, vacancy, or lease expiration forces the question. In next week’s blog, “What Retail Property Owners Should Review Before Relying on a Lease Guarantee,” I’ll explain what owners should verify with guarantor information before buying, refinancing, renewing, or selling a retail property. Final Takeaway Your property’s value depends not only on the rent being paid, but also on who stands behind that income and what the real estate is worth if the tenant leaves. If you are considering a sale, refinance, or lease renewal, call or DM me. I can help you compare the guaranty, lease term, replacement costs, underlying real estate, and the value buyers may place on your income. If the tenant and guaranty disappeared tomorrow, would your location, market rent, and replacement demand still support your expected property value? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CommercialRealEstate #RetailProperty #NetLease #LeaseGuarantee #CorporateGuarantee #TenantCredit #PropertyValue #RetailInvesting #InvestmentSales #MarcRetailGuy #MarcPerlof
More Posts