Hope you're heading into a good Labor Day weekend. Most of the country will pay more than $4 a gallon to get wherever it's going — more on that below — but the bigger story this week was a contradiction between two Federal Reserve documents published two days apart. One of them was about your tenants, and it was wrong.

WATCH OR LISTEN ON YOUTUBE ▶️ (link in footer)

On Wednesday, the Fed published its Beige Book — the qualitative report where Fed staff call business contacts around the country and summarize what they hear. In the national labor market summary, it said retail and hospitality sectors saw falling labor demand. The information was collected on or before August 24.

On Friday, the Bureau of Labor Statistics published the August jobs report. Payrolls rose 162,000 against a consensus of roughly 55,000. Unemployment held at 4.1%. June and July were revised up by a combined 55,000, with July flipping from a loss of 23,000 to a gain of 21,000. The twelve-month average monthly gain is 31,000 — August was more than five times that.

And the sector that led the whole report was food services and drinking places: +59,000. Local government education added 42,000 (teachers returning, expected). Manufacturing added 16,000. Health care, which has carried job growth all year, added only 13,000. The information sector lost 23,000.

So the category the Fed's own survey flagged as soft was, eight days later, the single strongest hiring category in the country.

Why the miss? The Beige Book is a sentiment instrument — it captures what operators said they felt in July and early August. The payroll survey counts who was actually on staff the week of August 12. Different tool, different question. What operators did was hire, in exactly the category the survey said was pulling back. We've talked about this all year: people say they're worried, and then they go out to dinner.

The part of the Beige Book I'd actually anchor on is the Dallas District section. Texas, northern Louisiana and southern New Mexico: economic activity expanded moderately, with growth in manufacturing, banking and energy. Retail sales increased. Employment grew modestly. Outlooks stable to positive. Compare that to Cleveland, where consumer spending declined for the fourth consecutive reporting period, or Minneapolis, where spending was down, or the two districts that reported no change at all. Texas was on the right side of the split.

CRE Takeaway: Restaurants are the largest single tenant category in the strip centers I sell and lease across San Antonio, Austin and the Valley — typically 25 to 40 percent of the rent roll by square footage. When that category adds 59,000 jobs in a month the Fed's survey called soft, the read for an owner is direct: your operators are staffing up. Operators who staff up expect covers. Operators who expect covers renew. That's rent roll durability, confirmed by a payroll count rather than a survey.

Five Below reported Wednesday night. Comparable sales up 14.1% — the fifth consecutive quarter of double-digit comps — and management said the growth came from traffic and transaction volume, not average ticket. The company opened 52 net new stores in the quarter, ended at 2,022 locations, is on pace for roughly 150 openings this fiscal year, and raised full-year sales guidance to $5.63–$5.71 billion along with earnings guidance.

Why a dollar-plus concept matters to a strip center owner: Five Below is the box that takes the former mattress store, the former party store, the dark junior anchor. When a 2,000-store tenant says traffic is up double digits and it's opening 150 more, that is demand for inline and small junior-box space in suburban trade areas. That's your space.

Coresight Research's earnings roundup this week put Abercrombie, Burlington and Ulta in the strong column and flagged Dick's cutting its outlook — driven by the Foot Locker business it acquired last year, where athletic footwear turned heavily promotional. Dick's own stores were fine; the mall-based footwear chain was the problem.

The pattern across three weeks of retail earnings: value, treasure-hunt and necessity concepts are gaining traffic. Discretionary categories with heavy mall exposure are the ones warning. That maps almost perfectly onto open-air versus enclosed.

CRE Takeaway: Institutional retailer earnings are a directional signal, not a proxy for your center. But when the direction is "traffic-driven growth plus new-store expansion" from tenant types that lease 8,000 to 12,000 square feet in Texas suburbs, it tells you where to point your leasing effort. If you have a dark junior box or an inline vacancy over 7,500 feet, the value-retail expansion pipeline is real right now. That's a landlord's leverage window.

Reactive, eczema-prone skin isn’t just about dryness—it’s often a sign your skin needs more support, not just gentler products. At Treats Lab, we take a more intentional approach, formulating to support the skin moisture barrier while considering the microbiome that helps keep it balanced. Skincare designed to feel comfortable in the moment, and support resilience over time.

Use code STRIPCENTERIQ for 15% off. For more information, visit us at treatslab.co

Good news got complicated. A 162,000 jobs print, in a Fed that is openly debating a rate hike, is not neutral for borrowers.

Walk the week. Chair Warsh spoke at Jackson Hole last Friday and said the summer's inflation readings didn't show meaningful improvement — that the Fed might have more work to do. By Monday, CME FedWatch had September hike odds at about 66%, nearly double the prior week. On Thursday, Governor Waller said he'd be inclined to hold if next week's CPI comes in cool, but would consider a hike if it's hot — and that it may not take much acceleration to nudge him. Odds fell to roughly 50%. Friday's jobs report pushed them back to about 52%.

The 10-year Treasury closed the week at 4.79%, a three-year high. The 30-year sits around 5.25% per the Treasury's daily yield curve. Prime is still 6.75% — the Fed hasn't met since July.

The rate board (illustrative only, not a rate quote):

If you're pricing a fixed-rate acquisition or refi this week, your lender starts at the 10-year and adds a spread. That puts you in the 6.5-to-7 range, not the 6-handle you saw in the spring. If you're floating — bank line, construction loan, SBA 7(a) — you're on the prime track, and a September 16 hike takes prime to 7.00 the same week. Nobody renegotiates; your payment just changes on the next reset.

The owner-user angle matters here. SBA 7(a) loans price off prime. If prime moves to 7, the max SBA rate for a small owner-user buyer moves with it — a real second-order effect on the bid pool for sub-$2 million retail buildings, which is a large share of what trades in San Antonio and the Valley.

CRE Takeaway: Two decisions live on that board. If you have a fixed-rate maturity in the next 12 to 18 months, the 10-year at a three-year high sets your refi and it moved against you this week. If you're floating on prime, September 16 is a live payment event, and the CPI print on September 11 decides it. Waller said so in plain English.

The national average for regular hit $4.14 this week — the first Labor Day above $4 on record; the prior record was $3.82 in 2012. Diesel set an all-time high at $5.85. Crude has been trading in the $90s on continued Strait of Hormuz volatility.

Texas: $3.68–$3.69, second-cheapest state in the country behind Indiana, but up 92 cents from a year ago. Our edge versus the national number is about 46 cents a gallon. Real, structural, and the reason Texas consumers have more room than national headlines suggest. But it is not immunity.

The mechanic: gas stations are a line item in retail sales. When gas is up roughly 30% year over year, the headline retail number is inflated by price, not volume. Strip out gas and autos to see what your tenants actually sold. The EIA is forecasting gas to average about $3.72 nationally in Q4, so some of that distortion should unwind into the holidays.

CRE Takeaway: Fuel is a tax on discretionary spending, and Texas pays a smaller one. For an owner, the practical use is reading your own sales reports: when a restaurant tenant's percentage-rent report shows revenue up 5% and menu prices are up 4%, that's not traffic. Ask for the cover count.

Thursday, September 11: August CPI. Waller said he holds if it's cool, considers a hike if it's hot.
Tuesday–Wednesday, September 15–16: FOMC. Markets are at a coin flip.

If you're holding a maturity, sitting on a vacancy, or weighing whether this is the window to sell, this is the week to talk. I'll walk your rent roll against this rate board and tell you what I'd do.