Weekly Perl: A Commercial Real Estate News Recap

Marc Perlof • May 29, 2026
A banner for weekly commercial real estate news recap
A car is parked in front of a sign that says 223

Americans are 'entrenched' in financial stress amid debt and price pressures 

Economic conditions like gas prices well above $4 a gallon, according to AAA estimates, and annual inflation nearing 4%, per the Bureau of Labor Statistics, are pushing Americans’ financial stress levels higher.

The National Foundation for Credit Counseling expects Americans’ economic stress levels to tick back up in the second quarter of the year after a slight fall in the first quarter, according to its quarterly Financial Stress Forecast released on Wednesday...

The front of an aldi store with a sign in front of it.

Target Q1 tops estimates with strongest sales gains in four years

Target Corp. came out of the gate swinging in its first quarte, with better-than-expected sales in all six of its core merchandising categories as its turnaround efforts to attract shoppers under new CEO Michael Fiddelke gain momentum. 

The discounter reported that its total comparable sales rose 5.6%, the chain’s biggest quarterly increase since early 2022. Customer traffic rose 4.4% compared to the year-ago quarter...

An elevated outdoor view of a modern shopping mall promenade with manicured greenery, palm trees, and pedestrians.

Treasury yields tick lower as investors stay optimistic on Iran peace deal prospects despite U.S. strikes


Treasury yields inched lower on Wednesday as investor optimism over a potential settlement to the war in Iran was undented by pressure on the fragile ceasefire between Washington and Tehran. 

The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — fell 1 basis point to 4.481%...

The American flag waves against a bright blue sky between towering glass skyscrapers, viewed from a low angle.

Urban Outfitters notches record quarter; to open 54 stores this year


Urban Outfitters Inc. reported record first-quarter earnings and sales, with increases across all its divisions.

The apparel retailer’s earnings and revenue topped expectations, with especially strong performances from its wholesale and subscription segments, and its FP Group business, which is made up of Free People and activewear brandFP Movement...

A flat, single-story retail building with a

Abercrombie & Fitch sales hit record despite headwinds; to open 50 stores

The war in the Middle East weighed on Abercrombie & Fitch Co.’s first-quarter results, but its earnings still topped analyst expectations and its sales hit a new quarterly record.

The apparel retailer gave weaker-than-expected guidance for the current quarter, and said the conflict in the Middle East has “directly impacted” sales. In the earnings statement, CEO Fran Horowitz said that demand softened in Abercrombie’s Europe, Middle East and Africa region (EMEA) as the Middle East conflict ramped up, particularly impacting Hollister Brands, “and we are proactively managing inventory and marketing to support the region...” 

The main entrance of the NuHAA building, featuring a modern glass and stone facade, at sunset.

Ross Stores sales surge 21%; to open about 110 new stores in 2026


Ross Stores reported first-quarter earnings and sales that “significantly” exceeded guidance as it cited broad-based strength across its business.

The off-price retailer is not slowing down in its expansion. During the first quarter, it expanded into new and existing markets, opening 13 Ross stores and four DD's Discount locations. For the full year, the retailer plans to open approximately 110 new Ross stores and 25 DD's Discounts, CEO James Conroy said during the company's earnings call...

A green Publix Food & Pharmacy sign mounted on a white and beige building exterior against a blue sky.

Restaurant chains try to support franchisees as costs soar, sales slow

Major restaurant chains are taking steps to ensure the long-term viability of regional franchise networks that often account for most of their location expansion but are now being hit especially hard by rising costs and reduced consumer spending.

In recent quarterly earnings calls, executives of some U.S. dining chains discussed measures that include helping franchisees with remodeling and format changes and allowing franchisees to exit operating agreements ahead of contract expirations. This has allowed some chains to take back locations that were formerly franchised, and in some cases reassign stores to better capitalized franchisees...

Two bundt cakes on small plates: one with chocolate drizzle, one with caramel drizzle, with cinnamon sticks nearby.

Dick’s Sporting Goods sales top estimates; Foot Locker returns to growth


Dick’s Sporting Goods reported strong first-quarter revenue that topped estimates as its Dick's business continued to gain momentum and its Foot Locker business showed signs of turnaround.

The sporting goods giant's namesake business saw broad-based strength across its entire portfolio. Meanwhile, Foot Locker, which Dick’s acquired in September 2025, posted its first comparable sales gain since the fourth quarter of 2024, with growth of 0.6%. At Foot Locker U.S., comparable sales grew 6.4%...

Interior of a casual restaurant featuring blue chairs, red accents, brick walls, and a

Whataburger Revives Iconic A-Frame in New Restaurant Prototype

Whataburger has two new restaurant prototypes, and it has customers to thank.


Chief development officer Todd Ewen says design development started with listening. Guests told the company that they missed some elements that made “Whataburger feel like a Whataburger,” and he admits the 76-year-old company moved away from that across its recent iterations.

Billy Bias, director of design, notes that Whataburger used the A-frame from the beginning of its history until the mid-2000s. Now it’s coming back...

Retail REITs Ride A Scarcity Boom At ICSC 2026


Retail real estate entered ICSC 2026 with a noticeably different tone than prior years: optimism has replaced skepticism, and scarcity has replaced oversupply concerns. According to a May 21 BofA Securities report, conference attendance rose roughly 15% to 20% year over year as brokers, landlords, tenants, and investors crowded Las Vegas looking for deals and space.

Instead of debating whether brick-and-mortar retail can survive e-commerce pressure, industry players spent the conference discussing how hard it has become to secure quality retail space and investment opportunities. BofA analysts summarized the shift bluntly: “Retail’s new problem is not demand, it’s availability...”

How Tenant Improvement (TI) Decisions Affect Retail Property Value and Buyer Underwriting

By Marc Perlof • August 24, 2026
By Marc Perlof | MarcRetailGuy CA #01489206 August 17, 2026 If you own retail real estate, here’s what just changed for you. A tenant asks for a $100,000 tenant improvement allowance. The landlord thinks the request is unreasonable. The tenant thinks it is necessary to open the business. Who is right? Possibly both. The problem is that landlords and tenants often look at tenant improvement allowances, commonly called TI, from different points of view. The tenant sees money needed to build and open the business. The landlord sees money being invested into a property and a lease. Both sides may be looking at the same $100,000 but thinking about it very differently. The TI amount matters, but it should not be negotiated by itself. Rent, lease term, annual increases, free rent, tenant strength, guaranties, options, and TI are all connected. The real question for an owner is not simply, “How much TI am I giving?” It is, “What am I receiving in return?” The Tenant Sees the Cost of Opening Opening a retail business can require a large investment before the first customer walks through the door. Depending on the business and condition of the space, the tenant may need to pay for construction, equipment, signs, permits, inventory, employees, and marketing. From the tenant’s point of view, the TI allowance helps reduce the cash needed to open. That is why the tenant may focus heavily on the TI amount. The landlord, however, has a different concern. The Landlord Is Investing Capital For the landlord, TI is real money going into the lease. The owner should ask what the property receives in return for that investment. Is the tenant signing a longer lease? Is the rent strong? Are there annual increases? Is the tenant financially strong? Is there a guaranty? Will the improvements have value if the tenant leaves? The same $100,000 TI allowance can create very different risks. A $100,000 investment into a strong tenant signing a long term lease may make financial sense. The same investment into a tenant with limited financial strength, a weak guaranty, and improvements with little value to the next tenant may be much riskier. The amount is the same. The investment is not. TI, Rent, and Free Rent Are Connected A lease negotiation often includes several economic items. A tenant may ask for TI, lower rent, free rent, or some combination of all three. An owner should look at the total package because each option affects the property differently. TI requires capital upfront. Free rent delays cash flow. Lower rent can reduce NOI throughout the lease and may affect the property’s value. This does not mean one structure is always better. The answer depends on the lease term, rent increases, tenant strength, cost of construction, cost of vacancy, and the owner’s available capital. The mistake is negotiating each item as if it has nothing to do with the others. A Simple Example Assume a tenant is negotiating a 10 year lease and offers the landlord two choices: Option 1: $100,000 in TI with $10,000 per month in starting base rent. Option 2: No TI with $9,000 per month in starting base rent. At first, Option 2 may look better because the landlord keeps the $100,000. But the $1,000 monthly rent difference equals $12,000 per year. Before considering rent increases or other lease terms, the lower starting rent creates $120,000 less base rent over 10 years. There is another issue. Lower NOI may also affect the property’s value when a buyer underwrites the income. This does not automatically make Option 1 the better deal. The owner still needs to consider the timing of the $100,000 investment, the tenant’s financial strength, default risk, rent increases, the value of the improvements, and whether the owner has the cash available. The point is simple: saving money on TI does not automatically create the better financial result. Free Rent Is Also Part of the Investment Free rent can also be misunderstood. A tenant may view free rent as time to complete construction, hire employees, stock inventory, and open the business before paying full rent. For the landlord, it is income that is not being collected. Assume the monthly base rent is $10,000 and the tenant receives four months of free base rent. That is $40,000 in base rent the landlord does not collect. Depending on the lease, the tenant may still pay NNN expenses during the free rent period, or those expenses may also be reduced or delayed. The details matter. An owner who gives $100,000 in TI and $40,000 in free rent is making a larger investment than the TI number alone suggests. Leasing commissions, landlord work, and other concessions can increase the total investment further. This does not mean free rent is bad. It means the owner should measure the full cost of the lease package. More TI Should Be Supported by the Lease If an owner is being asked to invest more capital, the rest of the lease should support that investment. That may mean a longer lease term, stronger rent, annual increases, better security, a stronger guaranty, or other terms that reduce risk. If the tenant wants more TI, more free rent, lower rent, limited guaranties, and flexible options, the owner should ask whether the total package still makes financial sense. Occupancy alone does not make a lease a good investment. A Simple Payback Test One useful screening test is how long it takes the owner to recover the total lease investment. That should include TI, free rent, leasing commissions, landlord work, and other concessions. As a rough guide, an owner may want the total lease investment recovered within the first 25% to 40% of the firm lease term. On a 5 year lease, that usually means about 1 ½ to 2 years. On a 10 year lease, that may mean about 2 ½ to 4 years. This is not a perfect rule, but it is a useful warning sign. If most of the lease term is needed just to recover the upfront investment, the owner may be taking too much risk. Look at the Whole Deal The highest rent does not always create the best deal. A tenant offering higher rent may require more TI, more free rent, a larger leasing commission, or more landlord work. Another tenant may offer slightly lower rent but require much less capital and have stronger financials. That is why lease negotiations should be viewed as one investment decision, not a collection of separate deal points. Final Thought Landlords and tenants often misunderstand TI allowances because they are looking at the same money from different sides. The tenant is trying to reduce the cash needed to open. The landlord is deciding how much capital to invest and what income, security, and long-term value will be received in return. Before agreeing to or rejecting a TI request, owners should ask one question: What is the total investment I am making, and what am I receiving in return? If a tenant offered you a choice between higher TI and higher rent or no TI and lower rent, would you know which deal creates the better result for your property? In next week’s blog, How TI Decisions Affect Retail Property Value and Buyer Underwriting , we will look at how buyers review tenant strength, remaining lease term, future TI costs, lease rollover, and the durability of a property’s NOI. #RetailRealEstate #CommercialRealEstate #RetailLeasing #TenantImprovements #TIAllowance #CommercialLeasing #MarcRetailGuy Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide.

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • August 21, 2026
Retail sales post biggest drop since 2025 as spending momentum fades U.S. retail sales sank to their lowest in over a year in July as consumers pulled back on online shopping and vehicle sales. Retail purchases, not adjusted for inflation, fell 0.6% in July from the previous month in the biggest decline since May 2025, according to the Census Bureau data released Friday. Excluding gasoline and auto, retail sales dropped 0.2%...

Why Landlords and Tenants Misunderstand TI Allowances

By Marc Perlof • August 17, 2026
By Marc Perlof | @MarcRetailGuy CA #01489206 August 10, 2026 If you own retail real estate, here’s what just changed for you. A landlord and tenant agree to a $50,000 tenant improvement allowance. The lease is signed. Does the landlord immediately hand the tenant a $50,000 check? Usually, no. Agreeing on the amount of a tenant improvement allowance, commonly called TI, is only part of the negotiation. The lease and work letter should also explain what the money can be used for, who controls the construction, when the landlord pays, what documents are required, and what happens if the project costs more or less than expected. These details matter because TI is not just a lease concession. It is real money being invested into a tenant’s space. A TI Allowance Is Not Always Paid Upfront One of the biggest misunderstandings about TI is when the money is paid. In many lease structures, the tenant completes approved work and the landlord reimburses the tenant after certain requirements are met. For larger projects, payments may be made in stages as construction progresses. Before releasing funds, the landlord may require paid invoices, lien releases, proof of permits or approvals, evidence that the work was completed, and confirmation that the tenant is not in default. The exact requirements depend on the lease and work letter. For the landlord, the payment structure matters because paying the full allowance before work is completed can create unnecessary risk. What happens if construction stops, contractors are not paid, or the tenant never opens? For the tenant, waiting until the end of construction for reimbursement can create a cash flow problem. The tenant may need to fund the project before receiving the landlord’s contribution. Both sides should understand the process before the lease is signed. Construction Draws Can Spread Out the Payments Larger projects may use construction draws instead of one payment. For example, assume a landlord agrees to provide $150,000 in TI for a retail buildout. Instead of paying the full amount at the beginning or waiting until the entire project is complete, the landlord may release funds in stages as work is completed. The tenant may submit invoices, evidence of completed work, and required lien releases with each request. The landlord then reviews the request and funds the approved amount according to the lease. This can reduce the tenant’s need to finance the entire project upfront while protecting the landlord from releasing all the money before the work is completed. The process should be clear. Slow approvals or unclear requirements can delay construction and create conflict. Who Controls the Construction? Another important question is who manages the work. In some leases, the tenant controls construction and the landlord reimburses approved costs. In other situations, the landlord agrees to complete specific improvements before delivering the space. Some deals use a combination of both. Tenant controlled construction gives the tenant more control over design and contractors, but the landlord still needs to protect the property. The lease may address approved plans, contractors, insurance, permits, and changes that require landlord approval. Landlord controlled work gives the owner more control over the improvements but also creates greater responsibility for construction costs, scheduling, and delivery. Neither structure is automatically better. The right approach depends on the property, scope of work, tenant, and experience of the parties involved. What Can the TI Allowance Be Used For? The lease should clearly define eligible TI costs. A tenant may assume the allowance can be used for anything related to opening the business. The landlord may believe the money is only for permanent improvements to the property. Depending on the lease, eligible costs may include construction, electrical work, plumbing, flooring, lighting, HVAC, restrooms, architectural plans, engineering, or permit costs. Other expenses may be excluded or limited. The important issue is clarity. A tenant should not complete work expecting reimbursement only to later learn that some costs do not qualify. What Happens When the Budget Changes? A TI allowance is generally a maximum landlord contribution, not an unlimited construction budget. Assume the landlord agrees to a $75,000 TI allowance and the project ultimately costs $110,000. The lease should make clear who is responsible for the additional $35,000. The opposite can also happen. If the tenant completes the approved work for $55,000, what happens to the remaining $20,000? The answer depends on the lease. The unused amount may disappear, or the lease may allow another agreed use. The tenant should not assume that unused TI automatically becomes a cash payment. This is why the exact lease language matters. An allowance of up to $75,000 can mean something very different from an obligation to pay the tenant $75,000 regardless of the actual cost of the work. Construction Delays Can Affect Cash Flow TI payment and construction timing are closely connected to rent commencement. A tenant may believe rent should not begin until the business opens. The landlord may expect rent to begin on a specific date or after an agreed construction period. The lease should address what happens if construction is delayed and whether the delay was caused by the tenant, landlord, contractor, permit process, or another issue. For example, a two month delay on a space with $10,000 in monthly base rent can mean $20,000 in delayed base rent before considering NNN reimbursements and other costs. For an owner, construction delays are not only construction problems. They can directly affect property cash flow, NOI, and debt service. The TI Amount Is Only Part of the Risk Owners often focus on negotiating the lowest possible TI allowance. The amount matters, but the payment and construction process also create risk. A smaller allowance with an unclear process can lead to delays, disputes, unfinished work, or a tenant that cannot complete the project. A larger allowance with a clear scope, experienced team, strong tenant, and controlled payment process may create less risk. The goal is not simply to spend less money. The goal is to invest the right amount of capital into the right lease with a process that protects the property. Final Thought Agreeing to a TI allowance is only the beginning. The landlord and tenant should understand what costs qualify, who controls construction, when payments are made, what documents are required, who pays for cost overruns, what happens to unused funds, and how construction delays affect rent commencement. If those issues are unclear, a TI allowance that looked simple during lease negotiations can become a source of delays, disputes, and unexpected costs. For the owner, the goal is not to make the payment process difficult. It is to make sure landlord capital is released through a clear process that supports the lease and protects the property. If you agreed to fund a TI allowance today, would your lease clearly explain exactly when you have to pay and what needs to happen first? In next week’s blog, Why Landlords and Tenants Misunderstand TI Allowances , we will look at why both sides often view TI differently and why rent, lease term, free rent, guaranties, and other concessions should be negotiated as part of one economic package. #RetailRealEstate #CommercialRealEstate #RetailLeasing #TenantImprovements #TIAllowance #CommercialLeasing #MarcRetailGuy Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide.
More Posts