As we toil in the sweltering heat, we keep telling ourselves that it’s practically the holiday season — and today the retail market has gifted us a slew of updates.

Retail sales grew in July. Driven by back-to-school shopping and special promotions, the CNBC/NRF Retail Monitor shows overall sales increased by 0.74% from June and 0.92% year-over-year. Core sales, excluding autos, gasoline and restaurants, rose 0.95% month-over-month. Online sales and general merchandise saw the biggest gains. Despite economic challenges, consumers continue to spend on essentials.

Geopolitical tensions could throw the market off, though. Retailers are accelerating their import schedules into the U.S. over fears that conflict in the Middle East will disrupt shipping. 

They also have their eye on port workers back home. A contract between the International Longshoremen’s Association and the United States Maritime Alliance expires on Sept. 30, and workers have said they are ready to strike if their terms aren’t met. That would affect East Coast and Gulf Coast ports — the West Coast ports all went through this song and dance last year. Tensions rose, workers threatened to strike and business groups asked the federal government to step in, but ultimately, a new six-year contract was reached.

We’ve got a ton of news below of retailers growing, including Ace Hardware preparing to drop $1B on a new experiential store model, Warby Parker gearing up to expand its physical store count and Australian fashion retailer Princess Polly, a Gen Z favorite, preparing to take the U.S. by storm.

Crank up the AC and let’s unwrap today’s news.

— Mark F. Bonner, Jay Rickey, Catie Dixon and Kayla Carmicheal

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On Our Radar

• How the markets started, and how they’re going now. After a sharp drop earlier this week (to say the least), the S&P 500 bounced back with its best day since 2022, rising 2.3% on Thursday. The recovery was fueled by a significant drop in jobless claims easing concerns from recent unemployment data. The index is now down just 0.5% for the week, with the potential to erase those losses if today’s session is positive.

• If inflation keeps declining, the Federal Reserve might “soon” start cutting rates. Boston Fed President Susan Collins suggested that she expects a gradual return to the 2% inflation target with a strong labor market. However, she did not specify when easing would begin: “We’ll have more data before our September meeting.” Collins emphasized that despite recent hiring slowdowns, the labor market remains solid.

• Former President Donald Trump: U.S. presidents should influence rate decisions. “The president should have at least a say,” he said. Trump argued his business experience gives him better instincts than some Fed officials. The remarks hint at a possible shift in the central bank’s fiercely held independence if he wins a second term.

• National Book Lovers Day. Kayla will probably continue forcing herself to read Iron Flame, the very disappointing sequel to Fourth Wing. Catie is highly enjoying East of Eden, though it’s more than 600 pages, so it’s going to take her awhile. Meanwhile, Mark just finished the cycling classic The Rider and has moved on to I Am Legend. Jay is too busy consuming every bit of real estate news to read books. 

• The Paris Olympics wrap up on Sunday with the closing ceremony. For everyone who loved or hated the opening ceremony, the artistic director behind Celine Dion's performance of Edith Piaf's L'Hymne à l'Amour at the Eiffel Tower — and some stranger things — will also lead the conclusion. We look forward to your love letters and dissents regarding the spectacle. 

This Morning's News

BROKERAGE — Don't Look Now, But Brokerage Stocks Are Red Hot Again (Bisnow): CRE brokerage stocks have gained billions of dollars in value over the past month. Mostly because investors are expecting an interest rate drop soon, but also because most brokerages’ Q2 earnings showed improvement in revenue. Among the biggest firms, the lowest increase in share price is Cushman & Wakefield at 17% month-over-month, and the largest was CBRE at 23%. Dive into Q2 performance for CRE's biggest brokerages.

INVESTMENT — Investors Show More Interest In Making, Buying Loans (CoStar): Investors are increasingly favoring loan origination and purchases over direct property acquisitions. Fundraising into debt funds reached $9.1B in Q2, well above the $2.3B raised in Q1. Learn about the shift in investor behavior.

HEALTHCARE — MPT Loses Another $321M As It Hands Back 8 Hospitals To Lenders (Bisnow): Medical Properties Trust’s year-to-date losses now top $1B. It attributed its Q2 losses largely to its Massachusetts portfolio, and it, turning eight of those hospitals, all operated by Steward Health Care, over to its lenders. See where MPT's financials stand after this recent hit.

HEALTHCARE — 700 Rural Hospitals At Risk Of Closing (Healthcare Dive): Nearly every state has at least one hospital at risk of closure, and nine states could see the majority of their rural hospitals shut down. Discover why — and where — rural hospitals are struggling.

HOSPITALITY — Revenge Travel Is Over As Lower-Income Travelers Begin To Pull Back Spending (Bisnow): Hotel chains and hospitality REITs across the board reported declines in leisure travel in Q2 and reduced their growth expectations for the rest of the year accordingly. Why did the hospitality sector struggle last quarter?

AI — AI Could Halt Energy Use Growth In U.S. Buildings (ESG Dive): A new study by Lawrence Berkeley National Laboratory suggests that AI adoption could significantly curb energy use in U.S. buildings and cut building costs 20%. Dive into the details of the study.

RETAIL — Ace Hardware Preparing To Invest $1B Into Experiential Model (Retail Dive): Ace Hardware, which turns 100 this year, is set to spend $1B over the next five years to build a new experiential store model called Elevate Ace. Inside Ace Hardware's updated approach to retail.

RETAIL — Australian Gen Z Retailer Princess Polly Coming To America (CoStar): Princess Polly, a popular Gen Z fashion retailer from Australia, is planning to expand in the U.S.. The company already has a store in LA; next up is five stores in Arizona, California and Massachusetts. Here's why the retailer is expanding.

RETAIL — Warby Parker Grows Store Count (CoStar): Warby Parker opened 11 net new stores in Q2 and had 256 stores at the close of the quarter. The retailer plans to open 40 locations this year with the goal of expanding its physical presence to 900 stores. Take a look at how far along Warby Parker is with their goal.

PEOPLE — D.C.’s No. 2 Buildings Official Resigns After Being Caught With Secret Freddie Mac Job (Bisnow): Caroline Lian, the deputy director for Washington, D.C.’s Department of Buildings, has resigned after an ethics probe found she had been working for Freddie Mac. She did not disclose the position, which she held the entire time she worked for the city, though both jobs were considered full-time. It was also found she underreported her salary for a third position as a member of Falls Church City Council. A tale of two jobs — learn Lian's story.

RETAIL — Store Closures Drive Allbirds Q2 Nosedive (Retail Dive): Allbirds experienced a significant drop in Q2 sales, with store closures cited as a key factor. Post-leadership shakeups, here's where the footwear brand stands.

INVESTMENT — Venture Capital Investment Soars 56% (Colliers): Venture capital investments in Q2 totaled $57.8B, a 56% year-over-year increase. Which sectors are raking in the most?

CONSTRUCTION — Top CRE Index Expands Another 8% (Dodge Construction Network): The Dodge Momentum Index, a key indicator of commercial real estate activity, expanded in July, with retail planning steadily accelerating. Read about the latest in the construction sector.

DEVELOPMENT — LightBox CRE Activity Index Shows Momentum (LightBox): An analysis of nondisclosure agreements by asset class showed buyer interest in listings for multifamily and retail above the national average across all property types. Check out the report's findings.

RETAIL — Walgreens Considering Sale Of VillageMD (Healthcare Dive): Walgreens is exploring the possibility of selling VillageMD, a healthcare provider it heavily expanded with a $5.2B investment back in 2021. Learn about the VillageMD acquisition and where it stands today.

HEALTHCARE — Off-Campus Solutions For Hospitals? (Colliers): Hospitals are moving away from the traditional approach of having all departments, including nonrevenue generating ones, at their main campuses. Dive into how hospitals are restructuring.

HOSPITALITY — REIT Sunstone Downgrades Full-Year Guidance (CoStar): Short-term factors, like permitting for a hotel conversion, moderated Sunstone's outlook for 2024, but the REIT still reported 7% year-over-year RevPAR growth at its convention hotels. See why Sunstone pared down their FY numbers.

HOTELS — Braemar Refinances 5 Hotels With $407M Loan (Braemar Hotels & Resorts): Braemar Hotels & Resorts has secured a $407M loan to refinance five of its properties: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota and The Ritz-Carlton St. Thomas. Learn more about the terms of the financings.

HOTELS — Billionaire Ellison Buys Palm Beach Hotel (BNN Bloomberg): Billionaire Larry Ellison has acquired a luxury hotel in the exclusive Palm Beach enclave. The purchase adds another high-end property to Ellison's expansive real estate portfolio. Get the details about the hotel.

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The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at firstdraft@bisnow.com.