Your Retail Property Is Worth More Than You Think. Here's the Proof!
Marc Perlof • April 20, 2026
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
Sources
² JLL, Q2 2025 Retail Dynamics Report, citing CoStar data.; Nareit, Retail REITs Supported by Tight Supply, October 2025:
Disclaimer
This post is for information only. It is not legal, tax, or financial advice. Always check with a licensed professional before making decisions.
© 2026 Marc Perlof Group. All rights reserved.
By Marc Perlof | MarcRetailGuy CA #01489206 May 18, 2026 If you own retail real estate, here’s what just changed for you. In some situations, removing the price can lead to stronger offers. This approach allows the market to determine value instead of limiting it upfront. When used correctly, it can create competition and improve your outcome. More retail properties are being marketed without a price. Brokers are using offer-driven strategies to let buyers compete based on their own assumptions. What is causing it? Differences in buyer expectations and uncertainty in valuation are driving this shift. In many cases, investors and developers value the same property differently, especially when there is upside or redevelopment potential. How does removing the price affect your value? Removing the price can eliminate the ceiling. Buyers are not anchored to a specific number, which can lead to stronger offers when demand is present. When multiple buyers are involved, this approach can create competition and push pricing higher. What is the risk? If demand is limited, offers may come in below expectations. This often happens when the buyer pool is thin or when the property has uncertainty, such as a short lease term, tenant risk, or redevelopment challenges. When should you use Request for Offers? Use it when there is strong demand and the property is expected to attract multiple buyers. Even in these situations, active buyers and brokers will often ask for pricing guidance or a whisper price to understand where the seller expects the deal to trade. When should you use a more flexible approach? Use submit offers when you want flexibility and are testing the market. This approach allows you to respond to buyer feedback while still maintaining control of the process. Some properties are marketed without a price because the broker does not have a clear view of value. That is not the same as a strategy. When used correctly, removing the price is intentional and supported by buyer demand, positioning, and a defined process. Without that structure, it can create confusion and weaker results. We are seeing strong assets generate multiple offers with this approach, while weaker deals struggle to gain traction without pricing guidance. This strategy is not about avoiding a price. It is about allowing the market to define it when the conditions support it. If you need context, review Part 2: “Should You List Your Retail Property With an Asking Price?” In next week’s final article, read “How Strategic Underpricing Can Increase Your Retail Property Sale Price” (Part 4) , including one approach many owners overlook. If you are considering an offer-driven strategy, reach out before going to market. I will help you determine if your property can support it and how to structure it properly. Call or DM me for more information. Would removing your price increase your value or create uncertainty? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CRE #InvestmentProperty #CommercialBroker #LosAngelesRealEstate #NNN #RetailInvesting #PropertySales
CPI surged in April as inflation soars to highest level in almost 3 years Inflation accelerated in April to an annual rate of 3.8%, the highest since May 2023, as the Iran war pushed up energy costs and raised prices across the economy. By the numbers Economists predicted inflation would jump to 3.7% on an annual basis, up from the 3.3% reading in March, according to a FactSet poll.
By Marc Perlof | MarcRetailGuy CA #01489206 May 11, 2026 If you own retail real estate, here’s what just changed for you. An asking price can either create buyer interest or limit it. The outcome depends on how that price is positioned relative to the market. Buyers are moving faster and making quicker decisions. Deals that look correctly priced get immediate attention. Deals that feel stretched are ignored. What is causing it? Higher borrowing costs and rising expenses are forcing buyers to be more selective. At the same time, broader economic uncertainty is making buyers more cautious. They are comparing opportunities more closely and focusing on deals that make sense immediately. How does an asking price affect your value? An asking price sets the tone. If it aligns with market expectations, it creates activity. If it does not, it reduces interest and limits competition. If the market shifts downward while your property is listed, adjusting later to a lower price can be more difficult. Buyers may expect additional discounts, and you may need to catch up to where the market has already moved. What is the risk of overpricing? Buyers often do not negotiate. They move on. This reduces activity and weakens your position. When should you use an asking price? Use it when your property has clear value and strong comparable sales. This works well for stabilized retail assets and NNN investments. When should you adjust? If value is less certain or buyer opinions may vary, consider pricing guidance instead of a fixed number. This is especially important when there are limited or no recent comparable sales and you are effectively setting the market. Strong retail properties are getting immediate interest when priced correctly and little activity when pricing feels stretched. Pricing is not just about the number. It is about how buyers interpret that number. If you missed the foundation, go back to “How to Price a Retail Property for Sale in Today’s Market” (Part 1) . In next week’s article, read “When to Sell a Retail Property Without an Asking Price” (Part 3) , where I explain how removing price can create stronger offers. If you want to pressure test your asking price before going to market, reach out. I will show you how buyers are likely to respond and where your pricing may need adjustment. Call or DM me for more information. Is your pricing helping your property move forward or holding it back? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #NNNProperties #CommercialBroker #PropertyValue #CRE #LosAngeles #InvestmentSales #RetailInvesting
