The world is waiting to see how the tariffs on imports to the U.S. and other policies imposed by the Trump administration will affect retail, trade, real estate, and other vital components of the American economy.
In a research brief, Marcus & Millichap outlined several possibilities. It noted that the pace of consumer spending in physical stores increased by 2.9% year over year in May, although it has been slowing since March. However, personal and health products performed well, growing sales by 7.7% in the same period. This could benefit unanchored strip centers where shops selling these products are often located, including drug, beauty supply, and eyeglass stores. In such centers, the vacancy rate was lower than it had been for the previous 20 years at 4.8%.
Nevertheless, physical retail still faces challenges, including a slow start in 2025 and recording its first quarter of negative net absorption since 2020. Retailers announced more store closings than openings, and the rest of the year could see slowing demand. “Years of underdevelopment have placed added emphasis on well-located floor plans, highlighting backfill potential,” the report stated.
Online sales, however, are thriving, up 8.8% year-over-year in May. E-commerce represented 22.1% of total core retail receipts in April -- 70 basis points below 2020’s lockdown peak. More direct-to-consumer shopping is also occurring. The report said this underscores the need for distribution space.
“Although the overall industrial vacancy rate is rising this year after years of elevated development, it is advancing by the smallest margin since 2022, as total net absorption will pass 100 million square feet in 2025,” the report commented.
How tariffs will affect these sectors is yet to be determined, it noted, but predicted that the estimated tariff rate exceeding 15% as of June will impact prices. It pointed out that markets may not yet have fully felt the impact of a 0.3% year-over-year shift in Core Goods Inflation (CPI) in May. Additionally, a 50% tariff on steel and aluminum imports for large kitchen appliances took effect on June 23. The report stated that this demonstrates that import taxes could still rise higher.
Another unknown is how the war in Iran will impact the world’s oil supply. “If relations erode to the point of interfering with that trade, it could have a profound effect on the global energy market. Yet a de-escalation from here would result in only a modest, temporary price impact in the U.S.,” the report commented.
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