Good morning,

If you only skimmed the headlines this week, you probably caught "Fed holds rates steady" and moved on. I'd encourage you not to — because underneath that headline is the most divided FOMC vote in almost a decade, a fresh escalation in the Middle East, and a strip center REIT that just posted one of the best quarters I've seen all year. All three matter for how you think about your next 90 days. Let's get into it.

Wednesday, the Federal Open Market Committee voted 9–3 to hold the federal funds rate at 3.50%–3.75%. The vote itself wasn't the surprise — everyone expected a hold. The surprise was the dissent: three regional Fed presidents, Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas), all voted against the hold in favor of an immediate quarter-point hike. According to Bloomberg's coverage of the decision, that's the first time since September 2016 that three FOMC members have dissented in the same direction at the same meeting.

Chairman Kevin Warsh, running his second meeting since taking the gavel, called it "a good family fight" and reiterated that he's intentionally pulled forward guidance out of Fed statements — he wants the committee reacting to incoming data rather than signaling its hand in advance. Markets didn't wait for September to react. Odds of a quarter-point hike at the next meeting jumped into the high 50s to low 60s percent range, up sharply from where they sat a week ago.

The bond market moved even faster than the futures market. The 10-year Treasury closed Friday at 4.75%, per Trading Economics — the highest level since January 2025. The 30-year hit 5.21%–5.28% intraday, a level we haven't seen since 2007, according to the FOMC meeting recap.

The other half of this week's story is playing out overseas. The U.S. carried out fresh strikes on Iranian targets, and crude responded immediately — WTI settled Wednesday at $84.46 a barrel, per AAA's latest fuel report. That's flowing straight into pump prices: the national average is now sitting at $4.11 a gallon.

Here's the piece that should matter most to you as a Texas owner: our state remains one of the cheapest places in the country to fill up, averaging $3.64 a gallon — second only to Indiana nationally, per AAA's state averages. Every dollar a household in San Antonio, Austin, or the Valley isn't spending at the pump relative to a driver in California or the Northeast is a dollar that's still available to spend with the tenants in your center. That's not a small structural advantage — it's one of the reasons Texas retail keeps outperforming.

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Despite the rate and energy headlines, the consumer isn't cracking — at least not yet. Chipotle beat Wall Street's estimates Wednesday and raised its full-year same-store sales guidance, with comparable sales up 2.2% and digital sales climbing past 38% of total mix, according to the company's Q2 earnings call. Management specifically noted they're gaining share across income cohorts, not just at the high end.

For strip center owners, that's a useful real-time signal on necessity and value-oriented dining — exactly the category anchoring a lot of shop space in our markets. The consumer is being careful with discretionary spend. They're not disappearing.

Now let's put numbers on it. Two rates matter here, and they move on different tracks.

Your current loan — the one you're already carrying, plus any line of credit, SBA 7(a), or bridge paper — is priced off the prime rate. Prime held at 6.75% this week and stays there until the Fed actually moves, not before.

Your next loan — the one you're underwriting for a refinance or acquisition — is priced off the 10-year Treasury. At 4.75%, plus a typical retail lender spread of 175–225 basis points, you're looking at loan rates in the 6.50%–7.00% range this week.

The takeaway I'm sharing with every owner I talk to right now: think of prime as "what you're paying today" and the 10-year as "what you'll pay on your next deal." September 16–17 is the next live decision point for the Fed, and two CPI reports plus two jobs reports land before then. If your maturity or hold decision falls inside that window, that timeline should be part of your planning conversation.

While the rate story dominates headlines, property-level demand keeps proving itself. Regency Centers posted a standout second quarter this week — leased occupancy near a record 97%, new leases signing at nearly 16% cash rent spreads, and the company raised full-year guidance across FFO, core earnings, and same-property NOI growth, per the company's Q2 release. That's not one outlier quarter — it's grocery-anchored, necessity-based retail continuing to out-earn a rate environment that's supposed to be working against it.

If you want proof that tenant demand specifically in this state isn't slowing down: a national restaurant-tracking report covering activity through July 23 found Texas generating 56 of 98 verified national expansion signals — 26.7% of all new locations tracked, but 57.1% of all multi-unit and chain-location expansion signals in the entire country. Texas isn't getting its proportional share of restaurant growth. It's doing more than half the country's work.

Rates are more uncertain than they've been in months — a divided Fed, a hot Middle East, and a genuinely live September decision. But the tenants signing leases in Texas strip centers right now aren't waiting around to see how that resolves. If you're weighing a hold, refinance, or sale decision before that September meeting, that timing question is worth a conversation. I'm always glad to walk through what it means for your specific property.

Talk soon, Ray Kang, CCIM