This was one of those weeks where the headlines and the leasing comps were screaming completely different things at each other.

On Friday morning, the University of Michigan reported that consumer sentiment hit the lowest reading on record going back to 1952. On Wednesday afternoon, the largest publicly-traded grocery-anchored shopping center REIT in the country reported new lease rent spreads of 36 percent.

If you own a strip center, that disconnect is the most important thing happening in your market right now. Let's get into it.

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Consumer sentiment came in at 49.8 final for April — the lowest reading on records going back to 1952. Lower than the 2008 financial crisis, lower than the 2022 inflation peak, lower than COVID. (University of Michigan, April 24)

The data point that matters most for retail: one-year inflation expectations jumped from 3.8% in March to 4.7% — the largest one-month jump since April 2025. When consumers expect prices to keep rising, they trade down, eat at home more, and delay big purchases. That re-anchoring is happening in real time. (CNN Business, April 24)

The energy picture is no longer a "spike." It's the new baseline:

The retail sales optical illusion: March headline retail sales jumped 1.7% — biggest monthly increase since January 2023. Sounds great. But the report isn't price-adjusted, and gasoline station receipts surged a record 15.5%. Strip out gas and the consumer is materially weaker than the headline. (Advisor Perspectives / U.S. Census Bureau, April 21)

One bright spot: jobless claims at 214,000 for the week ending April 18 — still inside the historically healthy 200K–250K range we've been in since the pandemic. (U.S. Department of Labor, April 23)

10-year Treasury closed at 4.30%, with shopping center loan rates starting around 6.32%. (Federal Reserve H.15, April 23)

Here's where it gets interesting. On April 23, Phillips Edison & Company — the largest publicly-traded grocery-anchored shopping center REIT — reported its Q1 2026 results.

Quick context if you don't follow public REITs: PECO owns about 290 grocery-anchored neighborhood centers across 31 states. They're the cleanest public-market read on the kind of asset most strip center owners actually own.

The Q1 numbers:

(Phillips Edison & Company Q1 2026 Earnings Release, April 23)

Read that again. While consumer sentiment was hitting an all-time low, neighborhood center landlords were re-leasing inline space at 37.9% above the prior tenant's rent.

Honest caveat: PECO is grocery-anchored. Most of you own unanchored or shadow-anchored centers in San Antonio, Austin, or the Valley. You're not going to clock identical 36% new lease spreads. But the directional read is real — on-the-ground demand for well-located neighborhood retail space is stronger right now than it's been in years.

Three reasons that compound:

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If you've got a vacant suite or a renewal coming up, here's where your broker should be hunting:

Fitness & wellness — Crunch Fitness alone is targeting 100+ openings in 2026. Levin Management reports 40% of their portfolio centers now have a fitness tenant, totaling nearly 330,000 SF. Boutique concepts like Stretch Zone, HOTWORX, and pickleball are all chasing space. Fits anywhere from 1,500 SF up to 30,000+ for a full-service gym; second-generation pharmacy boxes are particularly attractive. (Chain Store Age, March 9)

Medtail (urgent care, dental, vision, specialty wellness) — About 20% of leased medical space is now in retail buildings, up from ~16% in 2010. Tenant improvement investments often run $200–$300/SF, which makes these the stickiest leases on your rent roll. Ideal for endcaps and outparcels — but watch parking ratios (urgent care needs 5–6 spaces per 1,000 SF vs. 3 for general retail). (Cushman & Wakefield)

QSR with drive-thrus — Beverage concepts (7 Brew, Dutch Bros, Swig) and chicken concepts continue to lead unit growth. Pad sites and outparcels remain red-hot in Texas. Caution: don't let one strong comp talk you into pricing every pad off the same number — long-term volumes have to support the rent.

Service tenants — the inline backbone — Look at recent Texas small-shop deals (Princeton Plaza near Dallas, Cross Creek Plaza in Fulshear) and you see the same playbook: smoothies, ice cream, nail salons, dental, fitness, vape shops. Local-services oriented, internet-resistant, time-saving. That's the whole pitch of your asset.

1. Mark-to-market your inline rent roll. If PECO is reporting record-high 37.9% rent spreads on comparable inline new leases, your in-place rents are very likely below market — particularly if your last leasing cycle predates 2023. Pull every lease expiring in the next 24 months. Build a market rent comp book for your trade area. Don't sign a renewal at last cycle's rates without understanding what a new tenant would pay.

2. Anchor turnover is no longer a credit event — it's a rent reset opportunity. Simon Property Group reported that 38 Saks Off 5th leases rejected in bankruptcy were re-tenanted at a +67% rent spread. If you have a struggling anchor or junior anchor coming up on renewal, model the mark-to-market upside before you panic. The tenant pipeline behind a backfill is deeper than it's been in a decade. (mmcginvest, April 19)

3. Hold-vs-sell math is more interesting than the macro tape suggests. Borrowing rates are elevated (~6.32%, with the 10-year at 4.30%), but your forward NOI growth is materially better than what underwriters were modeling 18 months ago. PECO's same-center NOI grew 3.5% YoY in Q1, and inline leasing deals are getting 2.7% average annual rent bumps. Don't anchor your decision on 2024 cap rate spreads — run the math on your actual asset.

The macro picture is genuinely difficult. Sentiment at an all-time low isn't a number you wave away.

But the leasing market for well-located neighborhood retail is, on the data, having one of its strongest moments in years. Both things are true at the same time. Don't let one set of data convince you to ignore the other.

If you're thinking about your hold period, your refi, your tenant mix, or your exit — this is the kind of week where a 30-minute conversation can save you a six- or seven-figure mistake. Hit reply anytime.

Talk next week,

Ray Kang, CCIM StripCenterIQ.com | raycrebroker.com

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