The retail sector’s record-low availability rate will buffer it from tariff headwinds, a CBRE report said. Although the Trump administration has paused sweeping reciprocal tariffs on most countries days after implementing them, questions still remain around the risk to retail real estate as companies weigh how much of the increased import duties they would absorb or pass on to customers.
Higher costs and uncertainty could eventually cause leases to be delayed or canceled as retailers reassess expansion plans and focus on operational efficiency. However, the sector’s 4.8% national availability rate provides some cushion against the potential negative impacts of tariffs. Slower new development driven by higher construction costs could also help keep this category low and support long-term market fundamentals, said CBRE.
Apparel is the consumer product category most likely to be impacted by higher tariffs, as nearly all of the inventory sold in the United States is sourced from other countries, according to the American Apparel & Footwear Association. About half of apparel imports come to the United States from China and Vietnam.
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Other products that are susceptible to tariffs include electronics, automobile parts, wine and spirits, and furniture. All of these categories are major retail occupiers, said CBRE.
Higher costs to procure goods, a potentially disrupted supply chain, and lower sales could trigger store closures and an accelerated shift to e-commerce. The report said the mall and lifestyle segment is most vulnerable to these factors because of its high concentration of apparel stores. Power centers are less vulnerable because their key tenant bases, including multi-channel retailers and home improvement stores, are performing well. Neighborhood, community, and strip centers with food and discount store anchors are best positioned to weather tariff effects.
Recent developments include the 90-day pause on tariffs and the universal 10% duties on all imports to the United States, except from Mexico and Canada, which are subject to different tariff regimes. Duties on Chinese goods remain, and a 25% slap on foreign steel and aluminum, as well as foreign cars and auto parts, are still in place.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
