RATE HIKES ARE ONE CONCERN

While a recession or a slowdown might not be the worst thing for IMAGE, there is one other concern. Should the U.S.'s imposed tariffs send inflation surging, the Fed might not be able to do its job by lowering rates, or worse yet, raise them.

"I think that's the thing none of us wants to see is rates continue to go up," Olsen cautioned.

"That's what I'm really concerned about, the [high] borrowing costs hurt everybody."

But for now, that will be a fight for another day, as it has yet to show in the Consumer Price Index.

SALON SUITES OFFER HIGHER RETURNS

What makes salon suites stand out from other retail subtypes, such as strip malls or shopping centers? According to Olsen, property managers can generally expect a higher rate of return on their investments in salon suites. This is because they are designed for entrepreneurs to operate solo, rather than hiring several employees. Olsen also said that the build-outs are expensive when salons are incorporated into other retail components and offer lower margins. In IMAGE's case, it designs its suites as turnkey studios with a "front-loaded investment."

"Because we front-load that investment, obviously we're able to charge more per square foot in rent for that studio space, which is where we are able to get good returns on real estate income for the business model," Olsen said.

While the returns are higher, the only trade-off is that these properties require a little more active management.

STRATEGY AND AMENITIES

IMAGE's strategy requires including around 30 to 35 studios at its properties, which in total average around 6,000 to 8,000 square feet.

Providing the right amenities for its beauty tenants is also key, which includes giving them access to a break room and a laundry area, where they can wash their towels and rags.

"We want to make sure that it's an inviting space, and it's convenient and comfortable for people to hang out in, because they spend a lot of time when they come in for a service," Olsen explained.

"We want it to be a top-notch experience."

Another critical aspect is ensuring that tenants can afford to make their payments. Since IMAGE charges a premium rent, it targets areas with high household incomes.

"The price point is critical, because it's the largest cost of goods on our [profit and loss] for what we pay in rent," Olsen emphasized.

"But then we need to make sure, with our market study and everything we look at, that the numbers play out, so that we know that people can afford to pay that rent."

It remains to be seen when exactly prices will rise and if the Fed will act to tackle the potential issue. As things stand, economists and forecasters are predicting that rate cuts will come in September or later.