THE LATEST ECONOMIC TRENDS IN CRE | May 2025

Written by: Collin Fitzgerald

Cooling Retail Sales Signal Slower Consumer Momentum Amid Tariff Concerns

Retail sales increased just 0.1% in April, in line with expectations but a sharp slowdown from March’s 1.7% surge, the strongest gain in over two years. While sales remained elevated due to frontloading ahead of tariffs, signs point to a cooling trend in consumer spending. A pullback is expected in the coming months, driven initially by the unwinding of pre-tariff purchases and later by higher prices from new tariffs. Auto sales stayed strong as buyers rushed to lock in prices before tariffs took effect. Spending at bars and restaurants also rose solidly, suggesting that falling consumer confidence hasn’t yet curtailed discretionary spending. However, sales of various goods softened, with control group sales declining outright. This sector is particularly vulnerable since the retail report emphasizes goods, which are more exposed to tariffs than services.

For Columbus's commercial real estate sector, particularly retail-focused assets, this slowdown in consumer spending could foreshadow a moderation in tenant activity and leasing demand. While local retail has remained relatively stable, national headwinds—such as tariff-related price increases and softened goods sales—could influence regional retailers' profitability and expansion plans. We may see tenants in goods-heavy retail categories delay openings, reduce store footprints, or push for more tenant improvement concessions as they navigate a more cautious consumer landscape.

Source: Oxford Economics, Trading Economics

Our Take

This data reinforces the importance of watching macroeconomic indicators when assessing the health of our local market. While discretionary categories like restaurants remain resilient- offering some support to mixed-use centers and experiential retail- overall softening in goods-based spending is a concern. Columbus’ commercial real estate players should prepare for increased scrutiny on retail tenants' financial health, slower deal cycles, and a potential shift in space demand toward service-oriented and experiential retail concepts that are less vulnerable to tariffs and more aligned with current consumer behavior.