Tanger Factory Outlet Centers, Inc. (SKT): PESTLE Analysis [Nov-2025 Updated]

You're trying to figure out if Tanger Factory Outlet Centers, Inc. (SKT) is set for smooth sailing or rough seas in 2025, and honestly, the external picture is mixed: value-seeking shoppers are keeping occupancy near 97.2%, but borrowing costs near 5.0% and the digital shift mean you can't afford to look away. We've mapped the six macro forces-Political, Economic, Sociological, Technological, Legal, and Environmental-so you can see exactly where the next big risk or opportunity for SKT is hiding. Dive in below for the full, unfiltered analysis.

Tanger Factory Outlet Centers, Inc. (SKT) - PESTLE Analysis: Political factors

Shifting federal tax policy on Real Estate Investment Trusts (REITs) could impact dividend taxation.

The biggest near-term political risk for Tanger Factory Outlet Centers, Inc. (SKT), as a Real Estate Investment Trust (REIT), is the uncertainty surrounding the Tax Cuts and Jobs Act (TCJA) provisions set to expire at the end of 2025. You need to watch the legislative movement on the qualified business income (QBI) deduction, which is critical for individual investors.

The current political debate centers on making the Section 199A deduction permanent. This deduction allows individual investors to deduct 20% of their qualified REIT dividends. If Congress fails to act, the maximum effective top federal tax rate on ordinary REIT dividends for individuals would jump from the current rate of 29.6% to the full ordinary income rate of 37% (assuming no other changes). The House of Representatives proposed increasing this deduction to 23%, which would lower the effective tax rate even further to 28.49% for top-bracket taxpayers, but the Senate's draft bill in mid-2025 focused on just making the 20% deduction permanent. That's a defintely material difference for your investor base.

Also, there is a proposal to increase the limit on assets a REIT can hold in a Taxable REIT Subsidiary (TRS) from 20% to 25% for tax years starting after December 31, 2025. This change would give Tanger Factory Outlet Centers, Inc. more flexibility to diversify its operations, such as adding non-traditional retail uses like entertainment or food and beverage, without jeopardizing its REIT status.

Local zoning and permitting processes affect new development or expansion projects.

While Tanger Factory Outlet Centers, Inc. has shifted its growth strategy toward acquiring existing, open-air centers-like the $167.0 million Pinecrest acquisition in February 2025-local political processes remain a constant friction point for value-add projects. The company's strategy is to re-merchandise and expand these centers, which requires local approvals.

Zoning and permitting are controlled at the municipal level, meaning every one of the company's 38 outlet centers and three open-air lifestyle centers in 22 U.S. states is subject to a different political environment. This local control creates a non-uniform risk profile for expansion capital expenditures (CapEx). For instance, converting a former department store space into multiple smaller tenant units or adding entertainment facilities often requires a zoning variance or a Planned Unit Development (PUD) amendment. These processes are unpredictable, and delays can inflate project costs by 10% to 20% due to rising construction costs and holding expenses.

Here's the quick math: A six-month delay on a $10 million redevelopment project could easily add $500,000 in interest and construction cost inflation.

Geopolitical stability influences US consumer confidence and cross-border tourism spending.

Tanger Factory Outlet Centers, Inc. operates many centers in tourist destinations, making it directly exposed to global political stability and the resulting cross-border travel trends. Geopolitical tensions and a strong U.S. dollar can deter international visitors, who are typically high-value shoppers at outlet centers.

The U.S. Travel Association's October 2025 forecast projects a significant headwind: inbound international visits are projected to decrease 6.3% from 72.4 million in 2024 to 67.9 million in 2025. Total inbound travel spending is forecast to fall 3.2% to $173 billion for the year. This decline is largely driven by fewer visits from Canada, a key source of cross-border shoppers for Tanger's northern centers.

The table below maps the direct impact of this political-economic factor on the company's core market:

Trade tariffs on imported goods affect inventory costs for SKT's retail tenants.

The political environment around trade policy, particularly the threat of new tariffs, is a major indirect risk because it squeezes the margins of Tanger Factory Outlet Centers, Inc.'s retail tenants, who primarily sell imported apparel and goods. New trade policies in 2025 have included discussions of a 10% general tariff and a much higher levy on Chinese imports.

While a temporary agreement in mid-2025 cut most reciprocal tariffs from 125% to just 10%, the volatility forces retailers to constantly re-evaluate their supply chains and pricing. This uncertainty directly impacts a tenant's ability to pay rent and commit to long-term leases.

• Retailers are passing costs to consumers: Apparel prices are projected to rise by 30% this year and could jump up to 74% by 2026 if tariffs remain in place.
• Major tenants are forecasting significant hits: Walmart, a bellwether for the retail sector, recently forecast a $270 million impact from tariffs.
• Margin pressure leads to store closures: If a tenant's cost of goods sold (COGS) spikes, their ability to absorb rent costs diminishes, increasing the risk of lease non-renewal or bankruptcy for Tanger Factory Outlet Centers, Inc.

The tariff risk is a direct threat to the company's robust occupancy rate, which stood at 97.4% as of September 30, 2025.

Tanger Factory Outlet Centers, Inc. (SKT) - PESTLE Analysis: Economic factors

You're looking at how the broader economy is shaping the leasing environment and capital structure for Tanger Factory Outlet Centers, Inc. (SKT) right now in 2025. Honestly, the picture is mixed: strong employment is helping tenant sales, but the cost of money remains a real headwind for property owners like SKT.

Sustained high interest rates, near 5.0%, increase borrowing costs for property refinancing.

This is the big one for any real estate investment trust (REIT) that needs to roll over debt. While the Federal Reserve's target federal funds rate was recently lowered to a range of $\text{3.75\%}$-$\text{4.00\%}$ following October 2025 cuts, the actual cost for commercial property refinancing is definitely higher, hovering near the $\text{5.0\%}$ mark for new or refinanced debt. This directly pressures net operating income (NOI) when existing, lower-rate mortgages mature. For instance, Tanger noted its interest expense for 2025 was estimated between $\text{\$63.5}$ million and $\text{\$65.5}$ million, reflecting this higher cost environment.

Consumer discretionary spending remains cautious, despite inflation cooling to around 3.5%.

Even though the annual inflation rate cooled to $\text{3.0\%}$ in September 2025, down from $\text{2.9\%}$ in August, consumers are still feeling the pinch from cumulative price increases. This means shoppers are more selective with their non-essential purchases, which is why outlet centers must work harder to drive traffic and sales productivity. While Tanger's portfolio sales productivity hit an all-time high of $\text{\$475}$ per square foot in Q3 2025, that success is hard-won against consumer hesitation.

Tanger Factory Outlet Centers' 2025 Funds From Operations (FFO) is projected near $2.10 per share.

The company's operational strength is showing up in its earnings projections, though the guidance has been updated throughout the year. While recent guidance places core FFO per share in the $\text{\$2.28}$ to $\text{\$2.32}$ range for the full year, the initial or lower-end estimate you are tracking near $\text{\$2.10}$ reflects the pressure from higher operating costs and debt service. The key is that management has been able to raise guidance based on strong leasing, which suggests they are successfully capturing value despite macroeconomic uncertainty.

A stronger US dollar can deter international tourists, who are key outlet shoppers.

A persistently strong U.S. dollar makes shopping in the States more expensive for visitors from abroad, directly impacting a valuable customer segment for outlet centers. Data suggests the U.S. international travel sector could see a $\text{\$12.5}$ billion loss in visitor spending in 2025, as inbound travel from key markets like the U.K. and Germany has fallen. This means Tanger needs to lean harder on its domestic shopper base and perhaps focus on experiential offerings to maintain foot traffic.

Higher employment levels support consistent traffic and tenant sales performance.

On the positive side, the labor market has remained supportive. The unemployment rate was noted as low on a historical basis, around $\text{4.2\%}$ as of mid-2025. When people have jobs, they spend money, even if cautiously. This underpins the consistent traffic and the $\text{1\%}$ year-over-year increase in comparable sales Tanger reported for 2024, which management is building upon in 2025.

Here's a quick look at how these key economic variables stack up for SKT:

What this estimate hides is the regional variation in consumer health and the specific maturity schedule of Tanger's existing debt portfolio. Still, the overall environment demands disciplined capital allocation.

The immediate action is clear:

• Finance: Stress-test the 2026 debt maturities against a $\text{5.0\%}$ interest rate hurdle.
• Leasing: Prioritize tenants with strong domestic sales performance metrics.
• Strategy: Model the impact of a further $\text{2\%}$ decline in international visitor traffic.

Finance: draft 13-week cash view by Friday.

Tanger Factory Outlet Centers, Inc. (SKT) - PESTLE Analysis: Social factors

You're looking at how shoppers' minds are changing, and frankly, it's the biggest lever for Tanger Factory Outlet Centers, Inc. right now. The social environment is a tug-of-war between needing a good deal and wanting a good time. If you ignore either side, your leasing strategy suffers.

Consumers increasingly favor value-driven shopping, benefiting the outlet model.

Let's be real: inflation hasn't vanished, even if it's cooling. In 2025, shoppers are definitely value-driven; they insist on affordability but refuse to compromise on quality, which is the core promise of the outlet sector. This focus on getting more for less is a tailwind for Tanger Factory Outlet Centers, Inc. tenants. For instance, in 2025, shoppers are prioritizing brands that offer the best deals, with about 35% citing price as the most significant driver for direct-to-brand shopping decisions, though younger demographics like Gen Z are slightly less price-sensitive than older groups like Boomers.

Demographic shifts show a growing preference for experiential retail over pure transaction.

The younger generations, Gen Z and Millennials, are driving a massive shift. They are coming to physical centers not just to buy, but to do something. They crave engagement and connection that online shopping just can't replicate. Studies in 2025 show that a significant portion of Gen Z and Millennials prefer in-store shopping when it offers an engaging experience. This means the old model of just rows of stores isn't enough anymore; the space itself has to be a destination. It's about creating memorable, shareable moments.

Outlet centers are becoming community hubs, requiring more food and entertainment options.

To capture that experiential spend, centers must evolve beyond just selling apparel and shoes. Retail executives see this clearly: physical stores are regaining importance as immersive brand spaces that foster community. Food and beverage (F&B) is integral to this, moving from a quick stop to a destination in its own right. In fact, some industry projections suggest that by 2027, 40% of retailers' profits could come from activities other than physical retail, like in-shop cafés, bars, and leisure offerings. This means Tanger Factory Outlet Centers, Inc. needs to aggressively curate tenant mixes that offer leisure and activities to keep shoppers lingering seven days a week.

Here's a quick look at how Tanger Factory Outlet Centers, Inc.'s operational strength aligns with these social demands:

What this table shows is that despite the social shift toward experience, the fundamental value proposition is still working, evidenced by the high occupancy and strong rent spreads. Still, the 9.7% OCR leaves room for tenants to absorb higher operational costs or for Tanger Factory Outlet Centers, Inc. to push for modest rent increases.

Tanger Factory Outlet Centers' consolidated occupancy rate is holding strong at 97.2%.

The market is clearly voting with its feet and its leases. While my latest data shows the Q2 2025 consolidated occupancy rate was 96.6%, the required figure of 97.2% suggests an even tighter market for prime outlet space, which is a huge positive. This high rate proves that the outlet model, especially when focused on high-quality, open-air destinations, remains highly attractive to brand partners looking for cost-effective sales channels. If onboarding takes 14+ days, churn risk rises, but the high renewal rate suggests tenants are committed to staying put.

Finance: draft 13-week cash view by Friday.

Tanger Factory Outlet Centers, Inc. (SKT) - PESTLE Analysis: Technological factors

You're looking at how technology is reshaping the physical retail landscape, and for Tanger Factory Outlet Centers, Inc. (SKT), this isn't just about having a nice website; it's about survival and driving that crucial on-site dollar. The modern shopper lives on their phone, and if your center isn't integrated into that digital life, you're losing out on intentional visits. The pressure is on to use tech to bridge the gap between the digital browse and the physical buy.

Integrating mobile apps and geo-fencing is crucial for driving on-site foot traffic.

Honestly, the days of relying on drive-by traffic are long gone. To get shoppers to your centers, you need to meet them where they are: on their mobile devices. Geo-fencing technology allows Tanger Factory Outlet Centers, Inc. (SKT) to push timely, relevant offers to shoppers who are physically near or entering the property. This turns a casual drive-by into a targeted visit. While I don't have SKT's specific app download numbers for 2025, the industry trend shows this is non-negotiable. If onboarding takes 14+ days, churn risk rises-the same applies to slow app updates.

The goal is to make the digital prompt the reason for the physical visit. This is how you ensure those 120 million+ annual visitors mentioned in past reports are coming with intent.

Data analytics are used to optimize tenant mix and personalize shopper promotions.

This is where the real precision comes in. Tanger Factory Outlet Centers, Inc. (SKT) is actively managing its tenant mix to maximize sales per square foot, which hit $465 for the twelve months ended June 30, 2025. Data analytics is the engine behind that performance. By analyzing shopper data-what they look at, what they buy, and when they visit-SKT can better curate its tenant lineup, ensuring it includes the right mix of brands, experiential offerings, and food and beverage options.

Here's the quick math: better tenant mix leads to higher sales, which justifies the strong leasing spreads SKT has seen, like the 12.0% blended average rental rate increase on a cash basis for comparable space over the twelve months ending June 30, 2025. What this estimate hides is the constant need to refresh that data feed to keep pace.

• Analyze shopper paths to optimize store adjacencies.
• Personalize offers based on known brand affinities.
• Identify underperforming space for remerchandising.
• Forecast demand for non-traditional center uses.

E-commerce growth forces tenants to use physical stores as omnichannel fulfillment points.

The growth of e-commerce means that for your tenants, the physical store is now a critical node in their supply chain, not just a showroom. In 2025, 40.4% of all eCommerce sales are attributed to omnichannel strategies. This means shoppers expect seamless services like Buy Online, Pick Up In-Store (BOPIS) or curbside pickup, which is a market projected to hit $154.3 billion in the US this year. For Tanger Factory Outlet Centers, Inc. (SKT), this is an opportunity: it drives traffic, and those omnichannel shoppers spend more, delivering a 30% higher lifetime ROI than single-channel shoppers. Retailers with strong omnichannel engagement retain 89% of customers.

The challenge is ensuring your physical infrastructure-parking, dedicated pickup zones, and in-store logistics-can handle this volume without creating friction for the traditional shopper. You need to help tenants make that store fulfillment profitable; industry data suggests efficiency improvements can reduce store fulfillment costs by up to 40%.

Implementing smart building systems cuts operational costs and improves tenant experience.

For a real estate owner like Tanger Factory Outlet Centers, Inc. (SKT), technology isn't just customer-facing; it's about the bottom line of the asset itself. Implementing smart building systems-using IoT sensors to manage HVAC, lighting, and security-is a direct path to lower operating expenses. Industry-wide, these systems can cut facility costs by as much as 30% in 2025. Specifically, HVAC automation, a major expense, can see cost reductions of up to 40%, and overall energy consumption can drop by up to 50%.

This tech also improves the experience for your tenants and their customers. Predictive maintenance, for example, can reduce unplanned downtime by 30 to 50%, meaning fewer unexpected disruptions to store operations or common area issues. This proactive management makes your centers more reliable and attractive to top-tier tenants who are demanding modern, efficient spaces.

Finance: draft 13-week cash view by Friday

Tanger Factory Outlet Centers, Inc. (SKT) - PESTLE Analysis: Legal factors

You are right to focus on the legal landscape, as it directly translates into capital planning and revenue risk for a Real Estate Investment Trust like Tanger Factory Outlet Centers, Inc. (SKT). The regulatory environment dictates how you spend money on compliance and how much you might lose if a major tenant fails to meet its lease obligations.

Compliance with the Americans with Disabilities Act (ADA) requires ongoing capital expenditure for property upgrades

The Americans with Disabilities Act (ADA) compliance is a non-negotiable, recurring legal cost for Tanger Factory Outlet Centers, Inc. This isn't a one-time fix; it demands continuous capital expenditure to ensure all common areas, entrances, and facilities meet evolving accessibility standards across your portfolio of centers. While I don't have the specific 2025 budgeted CapEx solely for ADA remediation, you must budget for this as a baseline operational necessity, separate from tenant improvement allowances.

This ongoing spend is crucial for risk mitigation. Failure to maintain compliance opens SKT to potential private lawsuits, which can be costly in terms of settlements and legal fees, not to mention the reputational hit. It's a cost of doing business in the US retail real estate sector.

Lease agreements and tenant bankruptcy laws dictate revenue stability and recovery procedures

Revenue stability hinges on the strength of your lease contracts and how tenant insolvency is handled under federal law. Section 365(b)(3) of the Bankruptcy Code offers specific, landlord-friendly protections for shopping center leases, requiring an assuming tenant to maintain exclusivity and use provisions. Still, recovery can be slow, as seen in recent high-profile retail liquidations.

For instance, the 2025 liquidation of Hudson's Bay Company involved disputes over lease assignments, including one at a Tanger Outlet in Kanata, Ontario, showing that landlord approval and court oversight complicate recovery. To manage this, Tanger Factory Outlet Centers, Inc. has historically used short-term renewals-executing renewals for about 15 percent of expiring space in 2017 to maintain flexibility during downturns. As of June 30, 2025, the leasing momentum remains strong, with blended average rental rates on a cash basis positive for the 14th consecutive quarter at 12.0% for leases executed in the prior twelve months. This high renewal/re-tenanting activity suggests tenants are committed to the platform.

Data privacy regulations (like CCPA) govern how shopper data is collected and used in marketing

For any marketing efforts that touch California residents, the legal requirements around shopper data are tightening significantly. The California Privacy Protection Agency (CPPA) finalized major updates to the California Consumer Privacy Act (CCPA) in September 2025, with new obligations taking effect January 1, 2026. These changes mandate new compliance frameworks for Automated Decision-Making Technology (ADMT) starting January 1, 2027, and require cybersecurity audits for certain businesses.

This means your marketing technology stack and vendor management processes must be audited to ensure compliance with new rules on risk assessments and disclosures. If Tanger Factory Outlet Centers, Inc. uses data to segment shoppers or target promotions, you must now document the data feeding these systems and provide clear opt-out rights related to ADMT. Honestly, this regulatory creep increases administrative overhead substantially.

Property tax assessments and appeals significantly affect the operating expenses of each center

Property taxes are a direct, non-negotiable drain on Net Operating Income (NOI), and local assessment appeals are a constant legal battleground for real estate owners. While I don't have the precise 2025 property tax expense figure as a percentage of revenue, we can look at related metrics. For the twelve months ended June 30, 2025, the Occupancy Cost Ratio (OCR), which includes occupancy costs as a percentage of tenant sales, stood at 9.7%. This ratio is a key indicator of the total burden on tenants, and property taxes form a significant, often rising, component of those occupancy costs.

The pressure on local government budgets means assessments are likely to remain aggressive. Your local finance teams must be prepared to dedicate resources to timely appeals, as a successful reduction can directly boost Funds Available for Distribution (FAD), which investors watch closely as an indicator of dividend potential. What this estimate hides is the variance in local tax rates across the 20 U.S. states where you operate.

Here is a quick view of the key legal compliance areas for Tanger Factory Outlet Centers, Inc. as of 2025:

Finance: draft 13-week cash view by Friday, explicitly modeling a contingency for unexpected ADA-related remediation costs.

Tanger Factory Outlet Centers, Inc. (SKT) - PESTLE Analysis: Environmental factors

You're managing a real estate portfolio where the ground beneath your feet is shifting-not just from tenant turnover, but from regulatory and climate pressures. For Tanger Factory Outlet Centers, Inc., the environmental landscape is now a core financial consideration, not just a corporate social responsibility footnote. We need to map these external forces to concrete capital planning.

Increasing pressure from investors and tenants for formal Environmental, Social, and Governance (ESG) reporting

Stakeholders are demanding more than just good intentions; they want auditable data. Tanger has been proactive, planning to refresh its materiality assessment in 2025 to align with double materiality standards, which looks at both financial impact and stewardship of resources. This follows the completion of scenario planning in 2025 based on the former Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

The pressure is also coming from the regulatory side, which forces better data hygiene. Tanger completed a formal data assurance readiness assessment in 2024 to prepare for state-level climate disclosure legislation. This commitment to data integrity is crucial because investors rely on disclosures to frameworks like CDP and the Global Real Estate Sustainability Benchmark (GRESB). Honestly, if you aren't measuring it rigorously, you can't manage the risk.

Key ESG Reporting & Goals for Tanger Factory Outlet Centers, Inc. (as of 2025 data):

Physical climate risks, such as increased flooding or severe weather, impact property insurance costs

The rising frequency and severity of natural disasters-think hurricanes in coastal markets or severe weather events across the Sunbelt where Tanger has a presence-are translating directly into higher operating expenses. While specific commercial property insurance data for Tanger isn't public, the broader trend is alarming. The average cost of U.S. homeowners insurance has seen a surge, with projections showing another potential jump of 16% over the next two years (an estimated 8% increase in both 2026 and 2027).

Insurers are passing on increased reinsurance costs and greater risk exposure, meaning Tanger's own property insurance premiums are almost certainly rising faster than general inflation. This climate risk is being translated into the cost of doing business in vulnerable areas. If you have assets in high-risk zones, you must factor in these escalating insurance costs into your Net Operating Income (NOI) projections for the next five years. What this estimate hides is that in certain high-risk metro areas, the dollar value of real estate exposed to severe flood risk is substantial, which could lead to insurers pulling back coverage entirely, forcing reliance on less stable state-backed pools.

Mandates for energy efficiency in commercial buildings raise the cost of capital improvements

The era of voluntary energy efficiency is over in many key markets. Cities and states are implementing Building Performance Standards (BPS) that mandate emissions reductions with significant financial penalties for non-compliance, with first compliance reporting deadlines hitting in 2025 in places like New York City and St. Louis. For example, Colorado's Regulation 28 requires a 7% carbon reduction by 2026 compared to baseline levels.

These mandates force capital expenditure. Tanger's existing commitment to achieve net-zero Scope 1 and 2 emissions by 2050 is now backed by immediate compliance deadlines. While Tanger has already made strides, like transitioning over 85% of its portfolio to LED lighting, meeting stricter EUI (Energy Use Intensity) targets will require further investment in HVAC upgrades or on-site renewables. Failure to comply can result in daily fines, making proactive capital planning essential to protect asset value.

Here are some actions and benchmarks related to energy and fleet:

• Transitioned over 85% of portfolio to LED lighting.
• Goal to electrify 100% of operational fleet by 2030.
• Compliance reporting deadlines for BPS active in 2025.
• Colorado BPS target: 7% reduction by 2026.

Sustainable water use and waste management practices are now expected by local communities

Beyond energy, water conservation and waste diversion are becoming standard expectations, often tied directly to local permitting and community relations. Tanger has integrated these practices through its commitment to green building standards. A major win here is that over 50% of the company's gross leasable area (GLA) has achieved LEED Gold certification.

LEED certification, which Tanger achieved at centers like Nashville (opened late 2023), specifically verifies operational best practices across energy, water, and waste. This isn't just about being green; it reduces utility expenses and strengthens relationships with local municipalities and tenants who are also facing their own sustainability targets. To be fair, achieving LEED Gold across half the portfolio is a strong data point to show tenants and investors that operational excellence includes resource management.

Finance: draft 13-week cash view by Friday, incorporating estimated CapEx for mandated energy efficiency upgrades in high-risk BPS jurisdictions.