Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof | MarcRetailGuy CA #01489206 April 21, 2026 If you own retail real estate, here's what just changed for you. The supply drought in retail is no longer a temporary condition. In Southern California, where available retail space was already scarce before construction costs spiked, it has become a structural advantage for owners. Fewer new competition means higher rents, tighter vacancy, and growing buyer demand for what you already own. What Is the Supply Drought? For over 15 years, developers have barely built any new retail space. That is not an accident. It is the result of rising construction costs, tighter lending, and weak developer confidence following the so-called retail apocalypse narrative. The numbers tell the story clearly. According to CBRE, annual retail construction completions from 2021 through 2023 fell by more than 80% compared to the mid-2000s. Construction starts hit all-time lows in both 2024 and 2025, according to Newmark's 2026 Sector Outlook. Colliers forecasts new retail construction will fall another 37% in 2026.¹ There is simply no new supply coming. And that matters enormously for what your property is worth today. What Is Causing It? Three forces are keeping new supply off the market simultaneously. First, construction costs remain elevated. Steel, aluminum, and copper are all subject to significant tariff pressure, which has driven up hard costs on any new development. Second, lenders are cautious. Retail lending has improved but has not fully recovered. Financing new ground-up retail is still expensive and difficult. Third, most developers who would normally deliver new product are focused on redevelopment, not new construction. Ground-up speculative retail is largely off the table for now. The result is a market where existing retail owners hold an advantage that cannot be easily replicated or replaced. Why Does This Matter for Your Property Value? How does limited supply affect rent? When tenants cannot find new space, they compete harder for existing space. That competition drives rent. According to JLL's Q2 2025 Retail Dynamics report, retail vacancy nationally sat at 4.3% at the end of the second quarter of 2025, with rent growing 2% year over year.² Colliers projects nationwide rent growth of approximately 1.5% for 2026, supported entirely by the lack of new supply. In supply-constrained markets like Southern California, rent growth at renewal has been running well above that average. Occupancy rates in REIT portfolios are holding at approximately 95%, according to Nareit analysis of Q3 2025 REIT earnings. That is not a cyclical number. That is a structural one. How are buyers underwriting retail today? Institutional capital has returned to retail in force, and they are underwriting it aggressively. According to JLL, the volume of institutional bids on retail properties being marketed for sale grew 102% over the past two years. REIT bid volume increased 117% over the same period. According to Northmarq, they are seeing sales activity and buyers paying more for the same income, which means your property is worth more today than it was two years ago across active shopping center markets. In California alone, 18 deals in the second half of 2025 exceeded $100 million, according to ICSC reporting. U.S. retail property sales rose 26% to $71.6 billion in 2025, according to MSCI.³ This is what happens when institutional money competes for a shrinking pool of quality assets. What Should You Do Right Now? Understand your rent position relative to market. If your current leases were signed two or more years ago, there is a strong probability your in-place rents are below today's market. That gap represents unrealized value. Document it. A well-presented rent roll showing rent-to-market spread is one of the strongest tools you have in a sale or refinance. Push rents at renewal. This is not the time to roll over leases at flat rates. Tenants have nowhere else to go. Demand for retail space is high and available supply is near record lows. Landlords in supply-constrained markets have real pricing power. Use it. Assess your hold vs. sell timing. Institutional capital is actively deploying into retail right now. Bid volume is at its highest level since 2016. If you have been waiting for the market to stabilize before selling, that moment is here. Cap rate compression in well-located strip centers and shopping centers is real and documented. Waiting longer depends entirely on your basis, your lease structure, and what you plan to do with the proceeds. Real Deal Insight In conversations I'm having with buyers right now, the first thing they ask for is the spread between in-place rents and current market. That number is driving offers more than cap rate right now. In active retail investment transactions today, buyers are paying close attention to the spread between in-place rents and current market rents. Properties showing significant upside to market are receiving aggressive offers. Strip centers and unanchored centers with short remaining lease terms are being underwritten with meaningful rent growth assumptions baked in, which is directly compressing cap rates and pushing values higher. Owner Self-Assessment If your leases were signed more than 24 months ago, do you actually know how far below market your rents are sitting right now? Do you know what a buyer is underwriting (How a buyer decides what your property is worth to them) your property at today, versus what you think it's worth? And if institutional capital is actively competing for assets like yours, do you have a broker with the market exposure to put your property in front of that demand? If any of those answers are unclear, that's the conversation worth having. If you couldn't answer those questions with confidence, let's talk. A 20-minute call is all it takes to tell you where your property stands today. If institutional capital is competing harder than ever for retail properties, the real question is: are you positioned to capture that demand, or are you leaving money on the table? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #RetailREIT #ShoppingCenterInvestment #StripCenters #CommercialRealEstate #SouthernCalifornia #LosAngelesRealEstate #RetailInvestment #NNNProperties #CRE #MarcPerlof #MarcRetailGuy

NRF: Retail sales inch up for sixth consecutive month in March Retail sales rose slightly in March despite inflation and high gasoline prices as many consumers received higher-than-usual tax refunds. Core retail sales (excluding restaurants, auto dealers and gas stations) were up 0.41% month over month in March and are up 7.05% year over year, according to the CNBC/Retail Monitor released Tuesday by the National Retail Federation. That compared with increases of 0.27% month over month and 5.87% year over year in February...