Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof | MarcRetailGuy CA #01489206 April 6, 2026 If you own retail real estate, here’s what just changed for you. The U.S. is not running out of money. But debt is rising and keeping interest rates higher. That is already pushing down retail property values. Higher government debt is keeping borrowing costs high, and that lowers your property value. What Changed What is happening? A recent article from Yahoo Finance claims the U.S. is “insolvent” based on Treasury data.¹ The idea comes from comparing what the government owes to what it owns. What is causing it? The U.S. keeps spending more than it collects. Total debt keeps growing. At the same time, interest rates have gone up. That makes it more expensive for the government to borrow money. This does not mean the U.S. cannot pay its bills. It means the system is under pressure. That pressure affects interest rates across the economy. Why It Matters (Value Impact) How does this affect your property value? Retail property values are tied to income and cap rates. Cap rates follow the 10-year Treasury. When government debt keeps rates higher, cap rates stay higher. Higher cap rates mean lower property values. How are buyers underwriting this today? Buyers are using higher borrowing costs in their numbers. They are also assuming they will sell at higher cap rates later. That lowers what they can pay today. What happens if rates stay high? Your income becomes more exposed. Expenses like insurance and maintenance keep rising. If rent does not keep up, your net income drops. Lower income plus higher cap rates equals lower value. Strategic Advice for Retail Property Owners What should you do right now? Base decisions on today’s borrowing costs. Not past pricing. If you are selling, price to current cap rates. If you are holding, protect your income. What should you review in your lease? Look closely at what expenses you can pass through. Insurance, CAM, and repairs matter more now. If your lease does not fully protect your income, your value is already exposed. What should you prepare for? Plan for rates to stay higher longer. Build in margin for higher costs and slower leasing. Do not rely on rate cuts to fix your deal. Real Deal Insight Buyers are pricing retail deals today based on current debt costs and higher cap rate assumptions. A recent strip center owner in Southern California expected pricing based on a 5.25% cap rate from prior comps. Today, buyers are underwriting closer to 6.25% to 6.75% due to higher debt costs and exit assumptions. On a $1,000,000 NOI: At 5.25% cap → value ≈ $19.0M At 6.50% cap → value ≈ $15.4M That is a ~$3.6M difference, without any change in income. This is the gap sellers and buyers are working through right now. Deals are getting done, but only when pricing reflects today’s cap rates and financing reality. Market POV Pricing is a moving target right now. If you are thinking about selling or completing a 1031 exchange in 2026, looking at your property’s value sooner rather than later is optimal. Waiting for rates to drop may not bring values back to prior peaks. Buyers are already adjusting to a higher rate environment, and pricing is resetting in real time. Owner Self-Assessment If you had to sell today, would your current income support today’s higher cap rates? Market Data and Sources U.S. federal debt is over $34 trillion and continues to grow.² Interest on that debt is now one of the largest government expenses.³ The 10-year Treasury has been around the 4% range, well above prior lows.4 This shift is already showing up in pricing across Los Angeles retail deals today, and it is changing how buyers and sellers are negotiating in real time. If you own retail real estate in Los Angeles or Southern California, this is already showing up in pricing, negotiations, and deal structure across strip centers, shopping centers, and NNN assets. If you own retail real estate, I can show you what your property is worth today based on current cap rates, buyer demand, and real underwriting. Call or DM me for a current value analysis. What happens to your property value if cap rates increase 0.5% to 1.0%? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #NNNProperties #CapRates #CommercialRealEstate #RetailInvesting #LosAngelesRealEstate #CREMarket #InvestmentProperty #StripCenters #ShoppingCenters #RealEstateStrategy

'Mild stagflation': Bank of America rips up economic forecasts, braces for $100 oil all year on Iran war disruptions Bank of America analysts are projecting slower growth, higher inflation, and $100 per barrel oil all year as a result of the Iran war — even if it ends within weeks. "The war dividend so far: mild stagflation," BofA economist Claudio Irigoyen and his team wrote in a note on Wednesday, referring to the economic phenomenon of higher inflation coupled with slower growth...