Weekly Retail Real Estate News
Marc Perlof • September 22, 2023
The Fed Maintains Its Wait-and-See Stance
The Federal Reserve’s policy-setting committee on Wednesday voted to leave its policy rate unchanged, suggesting that the economy is moving in the right direction and inflation impulses are easing. The decision leaves the overnight lending target rate for banks at between 5.25% and 5.5%, which the Fed believes is restrictive territory or a level that constrains economic growth.The last time the committee raised rates was at its July meeting.
Portillo's Bolsters Growth Projections to 920 Restaurants
Portillo's has been around for six decades, but no era in the company's history matches up to its current growth trajectory. At a minimum, the brand said it has room for 920 U.S. stores, a more than 50 percent increase above its previous projection of 600. This larger whitespace projection calls for 120 drive-thru-only units and urban-based walk-up locations. These outlets would only appear in markets with six to eight full-scale Portillo's locations. The brand foresees additional alternative formats in airports, college campuses, and overseas.
Beverly Hills Seeks To Eliminate Confusion Over Retail Image
An attempt to create an elegant image for luxury retail real estate in Beverly Hills, California, can cause confusion, real estate professionals say, potentially creating the appearance of a lack of property demand in the home to wealthy celebrities and corporate CEOs. Online news stories and social media posts have claimed that some shops and restaurant spaces around famed Rodeo Drive are empty or boarded up due to perceived theft issues.
First Look: Walmart opens its first-ever pet services center
Walmart’s transparent, affordable health care model is going to the dogs. Literally. In a pilot that expands its traditional pet supplies business, the retail giant has opened its first-ever dedicated Pet Services center, in the Atlanta suburb of Dallas, Ga. It’s located in the same store where Walmart opened the doors to its first walmart health center in 2019.
Inside Jack in the Box’s Franchise Revival
Salt Lake City is Jack in the Box’s first new market in over 10 years and marks the first step in an aggressive expansion effort. The 72-year-old legacy chain is making significant progress on its push to reignite franchise growth nationwide.
Nontraditional Site Competition Heats Up in Fast Food
Sbarro CEO David Karam knows how to capture an impulse occasion. It starts with igniting the senses and creating a craving, then satisfying it with a slice of New York-style pizza. That’s how the chain became the quintessential food court operator synonymous with mall culture back in the early 2000s.
The 24 Fastest-Growing Fast-Food Chains in America
As brands seek growth, they're still dealing with equipment issues, permitting delays, and a potential recession. All of there factors are under deep consideration as chains pick and choose real estate.
Chicago Studies Possibility of City-Owned Grocery Store
The city of Chicago said it is partnering with a national nonprofit organization to explore the feasibility of opening a city-owned grocery store in an underserved area of Chicago. Chicago would be the first major U.S. city to open a municipally owned grocery store to address food inequity, according to a statement from the office of Chicago Mayor Brandon Johnson.
6 Shifting Consumer Trends Affecting Quick-Service Restaurants
Consumers’ preferences are shifting like never before, due to a variety of societal and economic dynamics. How can quick-service restaurants adjust to maintain—and potentially increase—foot traffic during these transformative times? The first step is to gain awareness of the consumer mindset, and then develop a strategy to add value and growth.
Birkenstock files for IPO
An iconic, German-made footwear brand with a devoted global fan base has filed to go public in the U.S. Birkenstock, which was founded some 250 years ago, has filed for an initial public offering. The company, whose filing didn’t how many shares it will list or a price range, plans to list on the New York Stock Exchange under the ticker symbol BIRK. The IPO could be valued at more than $8 billion, according to Bloomberg.
L.A.'s Thriving Sycamore District Is Home to Beyonce's Management, SiriusXM, Top Restaurants and a Record Store
Los Angeles has a new, hidden hub of music, art, retail and restaurants frequented by some of the biggest stars in music who are increasingly lured to the area by industry staples including SiriusXM, Jay-Z’s Roc Nation, Beyoncé’s Parkwood Entertainment, Kobalt Music Group, recording studio Record Plant and, soon, Sony Music Publishing.
Growth-Minded Freddy’s Keeps the Focus on Franchisees
Freddy’s Frozen Custard & Steakburgers has added more than 100 commitments to its growth pipeline this year already. That after just shy of 130 last year and 117 the calendar before. As one of
QSR’s Franchise Council members phrased it recently, “this quiet success story from the Midwest” has left its low profile behind. But how and why the burger brand charted rapid growth during an era of delays, surging inflation, and the continued recovery of the sector out of COVID, trails back to the origin, says Chris Dull, CEO and president, who took over the top post in May 2021.
No Fred Meyer stores are included in Kroger, Albertsons deal with C&S
Kroger and Albertsons agreed to sell hundreds of stores to C&S Wholesale Grocers as part of a divestiture plan for their proposed $24.6 billion merger, but the deal will not include any Fred Meyer stores, reports the
Oregonian. Instead, Kroger will sell stores from their QFC chain — in addition to some Albertsons Safeway banners — in an attempt to alleviate competitive concerns in the Northwest Region.
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
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...
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
