Tenant Credit Is Now the #1 Risk and Opportunity in Retail Property Repositioning (2026 Update)

By Marc Perlof | MarcRetailGuy CA #01489206 June 1, 2026 If you own retail real estate, here’s what just changed for you. Retail property pricing in today’s market requires flexibility, not certainty. Retail property owners who adjust pricing quickly and respond to real buyer behavior usually protect more value than owners who stay stuck on outdated pricing expectations. Many owners are still looking at pricing from a stronger market while buyers are making decisions based on today’s higher costs and higher risks. That gap is causing more stalled listings, lower offers, and longer negotiations across retail real estate transactions. What Changed Why does the market feel so uneven right now? The retail market is not moving in one clear direction. Some shopping centers and NNN properties are attracting strong buyer interest, while others are sitting on the market with little activity even in solid locations. Buyers are reviewing retail properties much more carefully than they were a few years ago. Instead of making quick decisions, they are spending more time evaluating tenant quality, lease terms, future expenses, and how stable the rental income looks long term. In Los Angeles and across Southern California, many retail property owners still expect pricing based on comparable sales from a stronger market. Buyers, however, are focused on what deals look like today with higher interest rates, rising insurance costs, and more uncertainty about the economy. How are higher rates affecting retail property pricing? Higher borrowing costs and elevated 10-year Treasury yields have changed how buyers calculate value. Loans are more expensive, monthly payments are higher, and many investors are becoming more cautious about risk. Buyers are also paying closer attention to future expenses such as maintenance, tenant turnover, insurance increases, and major property repairs. That has changed negotiations significantly. Buyers are moving slower, asking more questions, and pushing harder on pricing whenever they see uncertainty or future risk. At the same time, uncertainty does not automatically mean a property is weak. Some retail properties are still attracting strong interest because buyers see stable tenants, predictable income, and long-term value. The challenge for owners today is understanding whether weak activity is being caused by pricing, property fundamentals, buyer caution, or how the opportunity is being presented to the market. Why It Matters Does your retail property have one exact value today? No. In today’s market, your property usually has a pricing range. Where it falls in that range depends on how safe and reliable buyers believe your future rental income will be. Properties with strong tenants, longer lease terms, stable rent collections, and organized financial records are generally holding value better. Properties with short leases, deferred maintenance, weaker tenants, or unclear expenses are seeing buyers reduce offers much more aggressively. Even small concerns can impact value quickly. If buyers believe future risks are increasing, they usually lower what they are willing to pay right away. What are buyers worried about? Buyers today are focusing more on protection than upside. They want to know whether tenants can continue paying rent if the economy slows, whether future expenses can stay under control, and whether the property will still look attractive to future buyers several years from now. That is why cleaner and more predictable retail deals are performing better in today’s market. Strategic Advice for Retail Property Owners Should you price high and wait? Usually, no. In uncertain markets, waiting too long can hurt your leverage. Your asking price should help attract real market feedback quickly instead of simply reflecting what you hope the property is worth. The first few weeks on the market are extremely important. That is when your property gets the most attention and when buyer feedback is usually the most honest. If activity is weak early, buyers are usually telling you they see either pricing problems or too much risk. Is weak activity always a pricing problem? No. Not every slow period means your pricing is wrong. In uncertain markets, buyers sometimes pause decisions while evaluating interest rates, financing conditions, or broader economic concerns. Before making major pricing adjustments, owners should also evaluate whether the property is being marketed and positioned correctly. Weak marketing materials, poor buyer targeting, limited exposure, or failing to clearly communicate the property’s strengths can reduce activity even when pricing is reasonable. Before going to market, review anything that could make buyers uncomfortable. This includes lease rollover schedules, tenant quality, deferred maintenance, CAM reconciliations, and how organized your financial records are. Buyers are heavily discounting uncertainty right now. In uncertain markets, owners who adapt early usually protect more value than owners who wait too long to respond. Real Deal Insight We are seeing buyers place very different values on properties that would have sold for similar pricing a few years ago. Properties with stable income and lower perceived risk are consistently attracting stronger offers. Owner Self-Assessment If your property came to market today, would buyers see stable income and low risk or future problems that reduce value? If you are thinking about selling or want to understand how buyers would likely price your retail property today, reach out directly. I will walk you through how investors are viewing retail deals right now and where your property may realistically trade before you make a decision. Are you pricing based on today’s market or yesterday’s expectations? In the next article, “When to Adjust Price vs Hold Firm on Your Retail Property,” we will break down one of the biggest pricing mistakes retail property owners make after going to market: reacting emotionally instead of understanding what buyer behavior is actually telling them. Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #NNN #ShoppingCenters #StripCenters #CommercialRealEstate #InvestmentSales #CapRates #LosAngelesCRE #RetailInvesting #1031Exchange

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