Hey —

If you own a strip center and you've been quietly waiting for the market to come back around, this week delivered a message worth sitting with over the weekend.

Not bad news. Not good news. Real news — with context.

Investment Highlights

The U.S. Census Bureau released its advance retail sales estimate this week. February 2026 came in at $738.4 billion in total retail and food services — up 0.6% from January and up 3.7% year-over-year. On the surface, that's solid.

But the Conference Board's consumer confidence data told a more complicated story. The headline index ticked up slightly to 91.8. The Expectations Index — how people feel about the next six months — fell to 70.9. Historically, readings below 80 have often signaled a slowdown ahead.

And in a single month, the share of consumers expecting higher interest rates over the next year jumped from 34.9% to 42.4%. Inflation expectations surged — driven by oil prices and the ongoing conflict in Iran.

Owner takeaway: Your tenants' customers are still showing up. But they're shopping with more intention and less margin for error. That changes which tenants win and which ones don't.

🔗 Source: U.S. Census Bureau Advance Monthly Retail Trade Survey, April 1, 2026 — https://www.census.gov/retail/marts/www/marts_current.pdf 🔗 Source: The Conference Board Consumer Confidence Index, April 1, 2026 — https://www.conference-board.org/topics/consumer-confidence/

The USDA's Economic Research Service confirmed this week that restaurant and foodservice prices rose 3.9% year-over-year through February 2026. Grocery prices rose 2.4% over the same period.

That gap creates a behavioral shift: when eating out gets meaningfully more expensive relative to cooking at home, some consumers choose differently. The tenants who hold up best in that environment are value-oriented quick service — not mid-tier casual dining without a strong value story.

Service tenants — beauty, fitness, nail, tax prep, pet services, urgent care — continue to show relatively better resilience. The Conference Board data confirmed this week that even as overall service spending expectations fell, fitness, beauty, and personal care held relatively better than big-ticket categories.

Owner takeaway: The necessity-and-service tenant mix that defines a well-run strip center is the right mix right now. If you have holes in your lineup, filling them with service-oriented tenants is a higher-conviction move than it was 18 months ago.

🔗 Source: USDA ERS Food Price Outlook — February 2026 Summary — https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings

This week the Yale Budget Lab released its comprehensive April 2nd tariff analysis. When you stack everything in place, the average effective tariff rate on U.S. imports has risen by nearly 20 percentage points — with a short-run consumer price impact of approximately 2.3%, equivalent to roughly $3,800 in lost purchasing power per household.

A quick note on the legal mechanics, because most people haven't heard these terms and they matter. The administration originally used a law called IEEPA — the International Emergency Economic Powers Act — to impose broad tariffs on nearly every U.S. trading partner. IEEPA, passed in 1977, gives the president wide authority to regulate commerce during a declared national emergency. In February 2026, the Supreme Court ruled 6 to 3 that IEEPA does not authorize tariffs. Those tariffs were struck down.

In response, the administration pivoted to Section 122 of the Trade Act of 1974 — a law that does specifically authorize emergency tariffs, but with two hard limits: rates can't exceed 15%, and the authority expires after 150 days. Those Section 122 tariffs took effect February 24th. The clock is running.

What this means: if the administration wants to sustain tariffs beyond that 150-day window, it will need a new legal mechanism or an act of Congress. That uncertainty has a real cost — businesses can't confidently plan supply chains or pricing around a policy that may not exist five months from now. And that hesitation trickles down to consumer prices and tenant behavior.

One more thing worth watching: the import stockpiles that firms built up ahead of last year's tariff wave are nearly depleted. That means another round of retail price pressure could arrive on shelves in the coming months — just as that cushion runs out.

For necessity-based and service tenants — the backbone of most strip centers — exposure is relatively lower. For tenants selling physical goods with compressed margins, the next 90 days deserve attention.

Owner takeaway: This isn't panic territory. It's awareness territory. Know which of your tenants are most exposed to goods price inflation and stay in conversation with them.

🔗 Source: Yale Budget Lab, State of U.S. Tariffs — April 2, 2026 — https://budgetlab.yale.edu/research/state-us-tariffs-april-2-2026

There's a third force that connects everything else, and it's moving faster than any of the others: the oil shock from the Iran conflict.

Here's the context. The U.S. and Israel launched military operations against Iran in late February. Iran retaliated by effectively closing the Strait of Hormuz — a narrow waterway between Iran and Oman through which roughly 20% of the world's oil supply passes every day. That's approximately 20 million barrels per day. When that strait closes, global energy markets feel it immediately, and the effects reach far beyond the gas pump.

Brent crude surpassed $100 per barrel for the first time in four years in early March and has remained volatile since. West Texas Intermediate — the U.S. benchmark — was trading above $112 per barrel as of Thursday. The International Energy Agency has characterized this as the largest supply disruption in the history of the global oil market — larger in volume than either the 1973 Arab oil embargo or the 1979 Iranian Revolution.

And here's the part that matters most for the weeks directly ahead: the IEA director said this week that April will be much worse than March. In March, cargo ships that had already loaded before the conflict broke out were still arriving at ports. That pipeline of pre-war inventory is now empty. In April, there is nothing new coming through.

Goldman Sachs has raised its recession probability over the next 12 months to 30%. California gas prices have already crossed $5 per gallon. Oil executives and analysts quoted this week said the strait needs to reopen by mid-April or supply constraints will escalate sharply.

Owner takeaway: Higher energy costs compress household budgets. The same consumer who is already navigating tariff-driven price increases now has less discretionary income because they're spending more on fuel and energy. That's the person walking into your tenants' stores. This is not a distant macro story — it's showing up at the point of sale right now.

🔗 Source: IEA / CNBC, April 1, 2026 — https://www.cnbc.com/2026/04/01/oil-price-iea-fatih-birol-brent-iran-strait-hormuz.html 🔗 Source: YourNews, April 4, 2026 — https://yournews.com/2026/04/04/6757332/iran-conflict-disrupts-global-supply-chains-driving-up-costs-for/

The Federal Reserve H.15 release showed the 10-year Treasury finishing April 2nd at 4.31%. Earlier in the session it touched 4.38% before pulling back on news of possible Iran-Oman diplomacy around the Strait of Hormuz. Fed Chair Powell this week reaffirmed a wait-and-see stance. Markets are now pricing in no rate cuts for the rest of 2026.

Here's the practical math: with lenders pricing off the 10-year plus a spread of 175–250 basis points, effective loan rates on strip center acquisitions are running approximately 6.00–6.75%. At those rates, the debt coverage ratio and cash-on-cash math still constrain what buyers can pay — even when they want the asset.

The Iran conflict introduced upside rate risk this week that wasn't part of the conversation a month ago. If oil stays elevated and inflation expectations keep rising, the 10-year could drift back toward 4.5–4.75% before any relief arrives.

Owner takeaway: Buyer appetite is real and improving. Institutional and private capital both want strip centers right now. But pricing is still governed by the rate environment, not by desire. The owners who understand that distinction are the ones making clear-eyed decisions.

🔗 Source: Federal Reserve H.15 Selected Interest Rates, April 3, 2026 — https://www.federalreserve.gov/releases/h15/🔗 Source: TradingEconomics, U.S. 10-Year Treasury Yield — https://tradingeconomics.com/united-states/government-bond-yield

Two years ago, owners were waiting for rates to ease and buyers to return. That part happened. Capital is moving. Strip centers as an asset class have more institutional recognition right now than they've had in years.

But this week introduced three forces alongside that good news: a consumer under real purchasing power pressure from tariff pass-through, an oil shock from the Iran conflict that is compressing household budgets and threatening to push inflation higher, and a rate environment that may stay elevated longer than anyone expected back in January.

The window isn't closed. It's open. The conditions inside it are just more nuanced than a simple "sell now" headline.

The owners who will do best from here are the ones making decisions based on their specific property — occupancy, lease terms, tenant mix, rent-to-market — not on general sentiment.

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