Weekly Perl: A Commercial Real Estate News Recap

Tractor Supply hits store milestone; 100 new locations slated for 2026 Tractor Supply Company has already kicked off its 2026 expansion plans. The nation’s largest rural lifestyle retailer opened its 2,400th location with a new store in Aiken, S.C., which marks one of our stores set to open in the first two weeks of the year. Tractor Supply said it plans to open 100 new locations by the end of the year...

By Marc Perlof | MarcRetailGuy January 12, 2026 If you own commercial real estate, here’s what just changed for you. A rate cut by the Federal Reserve and even the prospect of a new Fed Chair are topics of increasing discussion. When they hear it, many commercial property owners believe that borrowing costs will decrease and property values will increase. That is just partially accurate. You need to understand the distinction between the fed funds rate and the 10-year Treasury to understand the true effect of interest rates on commercial real estate. One short-term rate that the Federal Reserve controls is the fed funds rate. Short-term loans, credit cards, and bank lending are all impacted. The yield on a 10-year Treasury bond is a market rate. It reflects global demand for safe assets, government debt levels, and long-term inflation expectations. Interest rates and commercial real estate cap rates are significantly more correlated with the yield on the 10-year Treasury bond than with the fed funds rate. Even as markets discuss potential rate decreases, the 10-year Treasury yield is currently in the low to mid-4 percent area based on data from late 2025 and early 2026¹. That gives us some crucial information. Long-term rates are not automatically lowered by a Federal Reserve rate cut. Why is this important for owners of commercial real estate? Because long-term rates, not headlines, determine cap rates. If the Fed lowers rates in response to a real economic slowdown and inflation remains under control, the 10-year Treasury yield may decline and support values. If the cut is perceived as premature or driven by political pressure, long-term rates may remain high or even rise, keeping cap rates elevated. Owners who price assets assuming that fed rate cuts automatically increase values risk chasing the market down. Buyers are underwriting off the 10-year Treasury, not press releases. Understanding this gap is often the difference between trading at market pricing and sitting unsold. The market has also been confused by recent Fed actions. To stabilize deposits and reduce stress, the Fed added liquidity to the banking system. This was not quantitative easing. It was not money printing. It was temporary support. As a result, it helped prevent panic but did not guarantee cheaper long-term financing for property owners². Key takeaways supported by non-fiction research The 10-year Treasury yield is set by markets, not by Fed announcements alone³ Long-term rates reflect inflation expectations and Treasury supply, not just policy rates¹ Commercial real estate cap rates and interest rates tend to move with the 10-year, not the fed funds rate³ Here are a few verified data points to ground this discussion. As of Q4 2025, the 10-year Treasury yield traded in a roughly 4.0 to 4.5 percent range according to U.S. Treasury and Federal Reserve data¹. Core inflation measures in late 2025 remained above the Fed’s 2 percent target, generally in the mid-2 percent range depending on the index and reporting month, which helps explain why long-term rates remain sticky². Commercial and commercial mortgage pricing continues to be quoted at a spread over the 10-year Treasury, reinforcing its importance for cap rates and interest rates³. For commercial real estate owners, the lesson is simple. Do not base decisions on fed funds headlines alone. Watch the 10-year Treasury yield, debt spreads, and lender behavior. That is where real pricing and value signals come from. If you own commercial real estate and are deciding whether to sell, refinance, or hold, now is the time to look past the noise and focus on how long-term rates are actually behaving. Reach out if you want a pricing or exit strategy built around where long-term rates are, not where headlines say they should be. If the Fed cuts rates but the 10-year Treasury stays high, how does that change your pricing expectations and exit strategy? #CommercialRealEstate #InterestRates #CapRates #CommercialRealEstate #MarketInsight