Weekly Perl: A Commercial Real Estate News Recap

Marc Perlof • February 16, 2024
A group of people are walking down a tiled floor.

NRF: January retail sales are ‘great’ start to new year


Consumers kept shopping in January. Retail sales in January nearly matched December’s busy holiday spending and rose significantly year-over-year, according to the CNBC/NRF Retail Monitor, powered by Affinity Solutions, released by the NRF. 

A chipotle restaurant is located in a residential area.

Chipotle Speeds Toward Even Greater Heights


You could say Chipotle had an enviable problem. The brand’s digital growth out of COVID soared rewards membership over 35 million and loaded up the backline to the point where stores became unbalanced in staffing. In the summer of 2022 or so, Chipotle launched what it dubbed “Project Square One.” As it sounds, the notion was to return to basics on the in-store experience that helped Chipotle define a category over three decades ago.

The outside of an arby 's restaurant with picnic tables and umbrellas.

Report: Inspire Brands Could Go Public in $20 Billion Valuation


According to a Wednesday report from Bloomberg, Inspire Brands-backer Roark Capital has held preliminary discussions with potential advisers to take the multi-concept giant public. An initial public offering would arrive in late 2024 or 2025, depending on market conditions, sources told the publication, with Inspire commanding a value of roughly $20 billion. 

An aerial view of a city with lots of buildings and streets.

15-story hotel planned next to new L.A. Clippers arena in Inglewood


Just south of Intuit Dome, where the L.A. Clippers are scheduled to begin playing games next season, Los Angeles-based Arya Group, Inc. is planning a mid-rise hotel development which would rank among the tallest buildings in Inglewood. The proposed project, slated for a site at 3820 W. 102nd Street, calls for razing a low-rise commercial building to make way for a new 15-story, approximately 310,000-square-foot building featuring a 174-room hotel, 3,255 square feet of offices, 6,537 square feet of hotel restaurant space, 1,310 square feet of lounge space, a 4,000-square-foot private club, and 4,000 square feet of spa and amenity space. 

An artist 's impression of a burger king restaurant at night.

Thanks to $400M Plan, Burger King Sees Guests Returning to Restaurants


The chain reported low-single-digit traffic growth in Q4, which was the first positive increase since Q2 2021. Also, U.S. same-store sales rose 6.4 percent, lapping 5 percent growth in the year-ago period. For the year, comps lifted 7.5 percent, rolling over 2.2 percent in 2022. Burger King franchisees are making more money as well. Average profitability per restaurant increased nearly 50 percent in 2023, moving from $140,000 to more than $205,000.

The front of a kroger store with a blue sky in the background

Kroger promises to lower prices, invest in stores following merger


The Kroger Co. has detailed its commitment to customers as it faces regulatory scrutiny over its proposed acquisition of rival Albertsons Cos. The supermarket giant said, consistent with its previous approach to mergers, it will lower prices following its merger with Albertsons. It plans to invest $500 million to lower prices following the close of the deal — starting day one.  It also will also invest $1.3 billion to improve Albertsons' stores. 

Two security guards are standing next to each other on a sidewalk in front of a ups truck.

Legion averages 100 “engagements” a day during first month of downtown deployment


The newly hired private security company patrolling Downtown Santa Monica reported more than 3,000 interactions during its first month on patrol and while local businesses say the systemic problems persist, some say they’ve seen signs of improvement recently. During the first meeting of the Downtown Santa Monica Inc., (DTSM) Board of Directors for 2024, security company Legion Corporation, presented a report on its first month of operations.

A brick building with a red and white sign that says snipple on it.

Shipley Do-Nuts’ Texas Roots Blossom into National Success


He worked as the chief executive of Korean fast-casual Bonchon for four and a half years and in marketing roles at Wingstop for the same amount of time. One of his biggest memories—or nightmares, if you think about it—was the cyclical nature of the chicken market, where operators live and die by what the price is on any given day, week, or month.

A shell gas station with a car parked in front of it.

Shell to acquire 45 convenience stores in New Mexico


Shell is expanding its U.S. retail footprint. The company has signed an agreement  to acquire Brewer Oil Company’s (BOC) retail division, which includes 45 fuel and convenience store sites in New Mexico. The acquisition also includes traditional fueling stations and cardlocks for fleet vehicles.

A man in a suit and white shirt is smiling for the camera.

World’s Largest Franchisee Flynn Group Explores Sale


Sources told Reuters that the majority interest could be valued at more than $5 billion, including debt. The company is working with Bank of America on the sales process. Flynn Group, founded in 1999 by industry veteran Greg Flynn, is the largest operator of Applebee’s, Arby’s, and Pizza Hut, and also owns hundreds of stores for Taco Bell, Panera, and Wendy’s. Altogether, the company oversees more than 2,600 units and earns more than $4.5 billion in annual sales. 

A dutch bros store with a truck parked in front of it.

Positioned for Success: Retail, dining segments to watch in 2024


Amid price hikes, rising interest rates and mounting consumer debt,  the retail industry did pretty well in 2023 — certainly a lot better than some experts had predicted — as consumers continued to shop. As to what to expect this year, foot traffic analytics firm Placer.ai has dived into its rich treasure chest of data to find which segments are best positioned for success in 2024. 

A Tenant Improvement Allowance Is an Investment, Not Free Money

By Marc Perlof • August 3, 2026
By Marc Perlof | MarcRetailGuy CA #01489206 August 3, 2026 If you own retail real estate, here’s what just changed for you. When a retail property owner hears that a tenant wants a tenant improvement allowance, the first reaction is often about the amount: “How much are they asking for?” That matters, but it is not the first question an owner should ask. The better question is: Does investing this money make financial sense for this property and this lease? A tenant improvement allowance, commonly called TI, is money the landlord agrees to contribute toward improvements to the tenant’s space. Depending on the deal, that money may help pay for flooring, walls, electrical work, plumbing, HVAC, restrooms, lighting, or other improvements. TI is common in many retail leases. But that does not mean every TI request is a good investment. For the property owner, TI is capital being invested into a lease. The return depends on the rent, lease term, tenant strength, cost of vacancy, and what happens to the space in the future. That is the real underwriting question. The Wrong Question: How Much TI Is Market? Owners often ask, “What is the market TI allowance?” There is nothing wrong with understanding the market. The problem is treating a market number as an automatic answer. Two tenants asking for the same TI allowance can create completely different investments for the landlord. One tenant may sign a long term lease, pay strong rent, provide a solid guaranty, and build improvements that could be useful to a future tenant. Another tenant may want the same TI allowance but offer weaker rent, limited financial strength, a shorter lease term, and highly specialized improvements that could be expensive to remove later. The TI amount may be the same. The risk is not. That is why TI should never be reviewed by itself. TI Is Part of the Entire Lease Investment A landlord should look at the entire economic package. That includes total TI dollars, starting rent, annual rent increases, lease term, free rent, leasing commissions, tenant credit, personal or corporate guaranties, options to extend, rent during option periods, reuse value of the improvements, and the cost and risk of continued vacancy. For example, an owner may agree to a larger TI allowance because the tenant is signing a longer lease with stronger rent increases and a strong guaranty. In another deal, even a smaller TI allowance may be too risky because the tenant is financially weak or the lease does not give the owner enough time to recover the investment. The TI number alone does not tell you whether the deal is good. The full lease economics do. Saying No to TI Can Also Be Expensive Some owners take the position that they will never pay TI. That may feel financially conservative, but it is not always the lowest risk decision. Vacancy has a cost. An empty space may mean lost base rent, lost NNN reimbursements, continued ownership expenses, maintenance, security concerns, and uncertainty about when the next qualified tenant will appear. If an owner refuses a reasonable TI investment and the space remains vacant for another year, the cost of that vacancy may be greater than the TI allowance that could have completed the lease. This does not mean an owner should accept every TI request. But saying no to TI does not always mean the owner avoids the cost. A tenant may agree to take the space without a TI allowance but require lower rent, more free rent, or other concessions instead. The Existing Condition of the Space Matters Not all retail spaces start from the same position. A second-generation space may already have usable flooring, restrooms, electrical systems, HVAC, lighting, plumbing, and a functional layout. A tenant may need only limited changes before opening. A shell space or heavily damaged space may require much more capital. The type of improvements also matters. A specialized user may require a buildout that has little value to the next tenant. A more general retail buildout may have broader reuse value. Owners should ask a simple question: If this tenant leaves, what am I left with? If the improvements are likely to help lease the space again, part of the TI investment may create longer term value. If the improvements are highly specialized, the owner may face another large capital expense when the tenant leaves. That risk should be considered before the lease is signed, not after the tenant moves out. Lease Term Matters A larger TI investment generally requires enough lease term and income to justify the risk. If an owner spends significant money improving a space but the lease term is too short, the owner may not have enough time to recover the investment before facing another lease negotiation. A longer lease does not automatically make a bad TI deal good. The owner still needs to understand how much capital is being invested and how much income the lease is expected to produce. This is where owners can make mistakes by focusing only on the monthly rent. A lease can produce attractive rent and still require a large upfront investment. The question is not only how much rent will be collected. It is how much capital and risk were required to create that income. Tenant Strength Changes the Risk The same TI investment can have very different risk depending on the tenant. An established tenant with strong financials may create one risk profile. A new business with limited operating history may create another. This does not mean a landlord should never invest in a new business. It means the investment should match the risk. If the landlord is putting substantial money into the space, the owner should pay closer attention to the lease term, security deposit, guaranty, rent structure, TI payment process, and what happens if the tenant never opens or defaults early. A landlord investing heavily into a tenant’s space is doing more than filling a vacancy. The landlord is taking investment risk. That risk should be priced and structured accordingly. TI Should Be Compared with the Cost of Doing Nothing One of the most useful exercises for an owner is comparing the TI request against the cost of staying vacant. For example, assume a 2,000 square foot retail space can be leased for $4.00 per square foot per month. That is $8,000 per month, or $96,000 per year, before expenses. Now assume the tenant asks for a $40,000 TI allowance. At first, the $40,000 may feel expensive. But if the owner rejects the deal and the space sits vacant for six more months, the owner may lose $48,000 in base rent alone. That does not include lost NNN reimbursements, maintenance, insurance, taxes, utilities, or the risk that the next tenant also asks for TI. That does not mean the owner should automatically say yes. It means the owner should compare the TI cost against the real cost of waiting. A strong retail location with multiple interested tenants may give the owner more leverage. A difficult vacancy with fewer qualified tenants may require a different strategy. The goal is not to be generous with TI. The goal is to make the decision that produces the best result after rent, time, risk, and capital are all considered. Think Like an Investor, Not Just a Landlord The best TI decisions come from treating the allowance as an investment. Before agreeing to the amount, ask: How much total capital am I investing? What lease income and term am I receiving in return? How strong is the tenant and the guaranty? What happens to my investment if the tenant defaults? What is the realistic cost and risk of staying vacant? These questions move the discussion away from whether a TI allowance is “normal” and toward whether the lease makes financial sense. That is where owners should focus. Final Thought A tenant improvement allowance is not automatically good or bad. It is an investment decision. Paying too much TI for weak lease economics can create unnecessary risk. Refusing reasonable TI and allowing a space to remain vacant can also hurt the property. The right answer depends on the rent, lease term, tenant strength, property condition, vacancy risk, and long-term value of the improvements. Before agreeing to TI, understand what you are investing, what you are receiving in return, and what happens if the lease does not go as planned. If a tenant asked you for a large TI allowance today, would you know how to determine whether it is a good investment or just an expensive way to fill a vacancy? In next week’s blog, “ How TI Allowances Are Paid and Why the Details Matter” , we will look at reimbursements, draw schedules, invoices, lien releases, cost overruns, and why the payment process should be clear before construction begins. Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CommercialRealEstate #RetailLeasing #TenantImprovements #TIAllowance #CREInvestment #MarcRetailGuy

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • July 31, 2026
Tractor Supply trims expansion; will close 75 Petsense stores Tractor Supply Co. reported a tough second quarter and reduced its outlook for the year. The nation’s largest rural lifestyle retailer cited “unusually adverse” conditions in May, which drove results below its expectations. On the earnings call, CEO Hal Lawton said fuel prices peaked during the height of its spring selling season, putting “meaningful” pressure on its customers' discretionary spending at the most important time of the quarter...

Should You Sell Now or Wait?

By 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
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