How Changes In Holiday Spending Are Reshaping Physical Retail

• Mall moment: This holiday season is revealing which retail spaces still draw real demand and which ones are being left behind.

• Deal breaker: San Francisco may ease its transfer tax as officials look for ways to restart frozen real estate deals.

• AML creep: A federal appeals court has put FinCEN’s proposed AML rules for mortgage and title firms on hold.

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Retail

How Changes In Holiday Spending Are Reshaping Physical Retail

The holiday season still separates strong retail from struggling retail, but the signals it sends have become more nuanced. Black Friday is no longer just a sales spike. It has turned into a broader test of which locations still draw shoppers, how people want to shop in person, and whether physical retail can hold its own alongside digital channels.

This year’s holiday performance is sending a cautiously positive message. Early forecasts were modest, shaped by inflation fatigue and consumer uncertainty, but spending has come in stronger than expected. Importantly, that growth appears to be driven more by higher transaction volume than by price increases, suggesting consumers are choosing to spend rather than simply absorbing higher costs.

Where that spending shows up matters as much as how much is spent. While overall foot traffic has softened, top-tier malls and experience-driven destinations are seeing gains, reinforcing a familiar divide. Quality locations with strong tenant mixes, dining, and social elements continue to capture demand, while weaker centers struggle to stay relevant during retail’s most critical season.

Overheard

San Francisco Rethinks Transfer Taxes as Deals Remain Frozen

San Francisco officials are once again taking aim at the city’s transfer tax, floating reforms designed to make deals pencil in a market where transactions have all but stalled. The proposal reflects a growing recognition that the existing tax structure, which sharply increases for higher value properties, has become a meaningful friction point at a time when pricing is already under pressure and buyers and sellers are struggling to find common ground.

The transfer tax has long been a quiet but powerful force in San Francisco real estate. Rates rise steeply on larger transactions, particularly those involving office and multifamily assets, making it harder to refinance, recapitalize, or sell properties without absorbing a significant tax hit. As office values have reset and capital markets tightened, that tax burden has effectively locked many owners in place, limiting price discovery and keeping distress mostly off the public market rather than resolved through transactions.

If the city moves forward with reform, the impact could be less about immediate deal volume and more about restoring optionality. Lowering or restructuring the tax could make it easier for owners to transact, restructure debt, or bring in new capital, even if pricing remains challenged. The risk, of course, is fiscal. Transfer taxes are a major revenue source for the city, and easing them in a down market comes with budget tradeoffs. Still, the fact that policymakers are willing to revisit the tax signals a shift in tone, one that acknowledges liquidity, not just valuation, is now one of San Francisco’s core real estate problems.

Legal Challenge Puts FinCEN Anti-Money-Laundering Requirement on Hold

A federal appeals court has put a hold on a new anti-money-laundering rule from the Financial Crimes Enforcement Network that would have required mortgage lenders, title companies and other settlement service providers to file suspicious activity reports and meet broad compliance obligations. The rule was designed to mirror requirements already in place for banks, aiming to close gaps in real-estate transaction transparency that regulators say criminals have exploited for decades. The legal stay means lenders and title professionals will not have to comply while the broader constitutional and procedural issues are litigated.

The case against FinCEN’s regulation arose almost immediately after the rule was finalized, with trade groups and industry associations arguing that Congress never authorized such sweeping reporting mandates for non-bank settlement service firms. Plaintiffs say the rule is arbitrary, would impose massive compliance costs on businesses with little benefit, and exceeds the statutory authority of FinCEN. Last month an appellate panel agreed to pause enforcement while it weighs those arguments, setting the stage for a full merits briefing and possible rehearing before the court.

What happens next matters for both sides. If the court ultimately upholds the FinCEN rule, mortgage lenders, closing agents and title firms will need to build or buy robust compliance systems, hire or train large anti-money-laundering teams, and adjust business practices to satisfy expanded reporting standards. That means tens of millions of dollars in new costs across the industry and a far more intrusive regulatory footprint in routine real-estate transactions. On the flip side, if the court strikes down the rule or throws it out on procedural or constitutional grounds, it would set a precedent limiting how far regulators can extend banking-style AML obligations onto nonbank actors.

That outcome would give the real-estate industry, and other non-bank sectors, a powerful argument against similar future rulemaking, but could leave policymakers scrambling to find other ways to address perceived weaknesses in real-estate transaction monitoring. Either way, this case is shaping up as one of the most consequential tests of regulatory boundaries between financial crime enforcement and real-estate commerce in recent years.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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