Tariffs are driving notable changes across malls and outlets, affecting retail operations and property owners. Rising costs in categories like apparel and footwear are filtering through supply chains. Larger discount chains and online retailers have more resources to manage these headwinds; however, smaller tenants are at risk due to drastic price swings and tighter margins.
Simon Property Group reported record funds from operations in 2025, strong occupancy rates and considerable sales per square foot growth, which makes the company resilient on paper. Management, however, is watching tenant health closely. Tariffs have the ability to expedite turnover among small independents and regional chains, putting added stress on leasing and property strategy. When these smaller tenants leave, owners may need to shift toward larger nationally known or high-performing brands, which could come at the expense of local diversity.
As for retailers, it is safe to expect increased price sensitivity among shoppers, as costs are steadily on the rise on the sales floor. An average price increase of around 1.2%, if tariffs persist, means communication, planning and careful margin control are paramount.
For property operators, it is important to keep space filled and foot traffic steady. This could mean repurposing space for food halls, fitness operators, or expanding outlet concepts in hopes of attracting value-minded shoppers hunting for deals, even as tariff effects ripple through the market.
Major brands like Costco, Walmart and Amazon are likely to continue using their scale to offset tariff impacts, as they don’t experience the same strain as smaller operators. Those smaller tenants will face greater challenges and may be at higher risk of closure. Landlords should watch tenant performance and be prepared to bring in stronger operators, rework lease agreements or invest in updates to keep properties stable.
Retailers can respond by reviewing inventory and strengthening direct-to-consumer or omnichannel strategies to maintain customer connections. Managing new store concepts or temporary pop-ups during renovations may help maintain steady traffic.
Monitoring redevelopment and outlet expansion announcements is important, as new tenants bring both challenges and opportunities. Moving to a more curated, brand-focused mix can support operational stability and lead to a more uniform shopping experience. Staying adaptable with leasing, operations and marketing is key as market conditions grow and evolve.
(Note: AI assisted in summarizing the key points for this story.)