Charlotte’s small business scene has had notable economic fallout from a series of immigration sweeps by the U.S. Border Patrol across the city last week, according to Charlotte Business Journal. 

The dayslong immigration crackdown, known as Operation Charlotte’s Web, interrupted local commerce and sparked anxiety across immigrant communities, with many shops catering to and run by immigrants shuttering their doors.

More than 370 people were arrested over four days of immigration sweeps in the city as of Nov. 19, according to Department of Homeland Security numbers reported by The New York Times.

On Nov. 20, the Mecklenburg County Sheriff’s Office claimed that the current operation in Charlotte was over, but the federal government contested this, saying all immigration enforcement operations are ongoing.

Local leaders are still assessing the damage. A number of businesses that closed their doors during the sweeps lost thousands of dollars in business. 

Manolo’s Bakery reopened on Monday after shuttering for the first time in more than two decades. Bakery owner Manolo Betancur estimates he lost $60K to $80K, CBJ reported. Tacos El Nevado, which has three Charlotte locations, also reopened on Monday with changed security measures in light of the raids.

Charlotte city officials announced they would release up to $100K in emergency funds to help residents who were economically impacted by the raids, Queen City News reports. The funds will be dispersed to help pay for rent and utilities.

There are more than 8,000 Hispanic-owned businesses in the area, according to estimates from the Latin American Chamber of Commerce Charlotte. Collectively, those businesses are responsible for an annual economic output of $12.9B.

Charlotte’s immigrant population has grown more than 126% over the past 25 years. Immigrants currently make up 16.5% of Charlotte’s residents, according to Reuters.

The Border Patrol stint in Charlotte comes after a September Supreme Court ruling that allows federal agents to check people’s immigration status based on factors such as race or language spoken. 

The Border Patrol is planning to conduct sweeps in New Orleans next, and immigrants already are staying home in anticipation of the raids, CNN reports.

When Taylor Winzeler moved his online fishing gear apparel and custom artwork business to a brick-and-mortar storefront in Houston, it was the realization of a long-held dream.

But just a year later, Winzeler is giving up the lease for his Laguna Madre Clothing Co., finding that sales aren’t nearly enough to cover overhead costs.

“I get emotional talking about this just because at the beginning it was such a celebration for me, such a milestone and something I really, really worked towards and something that I really thought was going to work,” Winzeler said. 

“[It’s] a complete 180 from the excitement and the buildup and the nerves going in and feeling like I’m sort of on top of the world … to now facing the reality of ‘I’m having to close this down. This is not working.’”

Rising taxes, inflation and spiraling insurance are bringing pain to a growing number of independent retailers. But it is dizzying rent increases that are putting the final kibosh on more small retailers as strong demand and limited supply growth have landlords holding every card.

Courtesy of Taylor Winzeler

Taylor Winzeler at Laguna Madre’s storefront in Houston

High demand and minimal new construction have driven up retail rents all over and for all retailers, according to JLL, most especially in the Sun Belt. JLL reported in February that rents for all retailers rose 6.7% in Phoenix from 2024 to 2025, 4.8% in Las Vegas and more than 4% in Charlotte, Orlando, Florida, and Dallas.

But increases are hitting small retailers hardest. Bank of America internal data through August showed that rent payments per small business client had increased 11% nationally year-over-year, with increases of up to 25% in the South.

About 67% of small-business owners are struggling with revenue shortfalls, 48% have seen rent increases, and 39% were unable to pay their rent in full and on time in January, according to Alignable’s latest Small Business Revenue & Rent Report.

“I think if you’re in any sort of small business that’s nonessential, you’re feeling the struggle,” Winzeler said. 

The historically low national vacancy rate of 4.1% looms over the retail landscape, forcing tenants large and small to battle for any available space. Inflation had already boosted expenses like insurance, labor and taxes.

Now, landlords’ desire for rent increases of up to 4% is disproportionately impacting independent retailers like Winzeler in cities like Houston. 

Those impacts haven’t gone unnoticed by retail brokers, who say their role in the market has become difficult as they watch mom-and-pops grapple with increasing costs and, in some cases, close up shop.

Some mom-and-pop shops have been operating consistently for 10 to 15 years despite flat sales, said Jazz Hamilton, senior vice president of CBRE’s Houston retail advisory and transaction services group. Those retailers are now struggling to increase profits to match cost increases, he said.  

“Rents and taxes and insurance go up, up and up. The profits drop, drop, drop,” Hamilton said at a press luncheon last month. “And then they’re not profitable.”

For every two small tenants Hamilton signs in a shopping center, two are moving out because they can’t afford it, keeping Houston’s retail vacancy rate consistent at about 5.4%, he said. 

“We are getting more and more pressure on those rental increases to go up at 2% and 3%. I’ve even heard some landlords pushing 4%,” Hamilton said.

Development of retail space is at a multidecade low, which is expected to continue through this year, according to a Colliers report. Those supply constraints help explain why average asking retail rents shot up to $20.86 per SF in Houston at the end of 2024, up from less than $17 per SF in 2018, according to Cushman & Wakefield. 

Nationally, triple-net asking rents increased to $34.47 in the fourth quarter, driven by strong demand to backfill empty spaces and a lack of new product, Colliers said. 

“I hear some of my peers talk about, ‘Oh, it’s great. We’ve got four people waiting on a space,’” Hamilton said. “I’m here to tell you, that’s not the case across the board. When you get into just normal, average retail, there’s still a lot of mom-and-pop. That probably makes up 50% of the market, and those people are struggling. It’s tough.” 

Steve McKinley owns Urban Value Corner Store, a convenience store chain that opens in mixed-use developments and apartment complexes in the Dallas-Fort Worth region as amenities for residents. McKinley founded the business about five years ago and just opened his 11th store, but increasing market rents are now heavily dictating where those new stores can go, he said. 

Most of his stores are locked in to five-year leases. If new asking rates rise significantly enough, he can shift to a different location, he said.

“Being a small-business owner, it becomes uncompetitive for us to consider [some spaces],” McKinley said. 

But most small businesses don’t have the economies of scale to survive accelerating cost pressures like rent hikes, natural disasters, inflation and tariffs in the same way larger corporations can, said Adrienne Crawford, Atlanta-based first vice president for Matthews Real Estate Investment Services. 

Crawford and First Vice President Lily Heimburger represent landlords, and they said rent increases tend to come with improvements to the properties. But tenants are now quicker to ask for a breakdown of all costs to know how they benefit from them, they said. 

“Of course, some of these smaller local restaurants and retailers are not going to be happy about the increase, but it will benefit them in the end,” Crawford said. “It’s just a little bit of sticker shock.” 

Rents are just part of the issue. Other rising costs can mean death by a thousand cuts for smaller retailers.

Anil Mohammed said he has seen insurance rates for retail double over the past decade. Mohammed is co-founder of Houston-based DML Capital, a retail developer of neighborhood service centers and strip centers with $500M of assets under management. 

“The insurance market is absolutely — I don’t even know how to put it nicely,” Mohammed said. “It’s just nuts.” 

DML consolidates its insurance policies to get a lower rate, as it often leases to mom-and-pop and regional tenants and aims to keep them long-term, Mohammed said. 

“A lot of guys won’t try to fight for every triple-net cost they can because they think they’re just passing it on to the tenant,” he said. “But in reality, if your goal is to keep the tenant for as long as possible, it’s in your best interest to fight it and get the cost down as low as possible.” 

Meanwhile, retail REITs are experiencing strong earnings growth driven by same-property net operating income increases. Brixmor Property Group’s same-property net operating income increased 4.7% during the fourth quarter, it reported during its last earnings call.

Kimco Realty cited a 4.5% same-site net operating income increase in Q4. Its full-year same-site net operating income growth was 3.5%, again primarily driven by higher minimum rent. 

“The primary driver continues to be higher minimum rents contributing 3.8%, mostly from contractual rent increases and faster rent commencements,” Kimco Chief Financial Officer Glenn Cohen said on its Q4 earnings call. 

It is possible that rent increases reach a point that mom-and-pop and regional operators would be driven out on a massive scale by increasing operating costs, Mohammed said, but he doesn’t expect that to happen.

“Then all you’re left with is your big-box national chains, national tenants, but you lose all the flavor for all the local unique stuff that a metropolis like Houston would give you,” he said. “There has to be a realignment on rent and some kind of realignment on insurance that creates a new equilibrium.” 

Crawford is also hopeful that the problem can be solved and retailers can temporarily pass higher costs on to consumers to make it through the hardest times.

“When the price of chicken wings went up, everyone had to increase their wing prices,” she said. “It’s happening across the board. You just see it more in the smaller restaurants than you do the larger chains and national concepts.” 

Fluctuating triple-net rent prices have always been a part of retail leasing, Heimburger said. 

“It’ll right itself at some point, we hope,” she said. “This problem will hopefully be solved. It always gets solved.” 

But any solution will come too late for Winzeler and others in his shoes.

Winzeler negotiated a tiered lease with his landlord, meaning it increased over the year Laguna Madre was open.

That year brought election uncertainty and continued inflation, culling the number of people interested in pursuing custom artwork and recreational clothing, he said. By the time the lease reached the highest amount negotiated, Winzeler said he was completely tapped out. 

“Not only am I reconsidering the retail portion of this business, I’m considering closing the business altogether because of how discouraging this has been,” he said. 

PowerHouse Data Centers has announced hundreds of megawatts of new projects over the past two weeks, much of it outside the industry’s largest markets. 

PowerHouse Senior Vice President for Asset Management and Development Matt Monaco, who joined in July from data center giant Equinix, says building massive campuses in smaller markets means walking a “fine line” between more speculative, higher-risk land deals and tenants’ growing need for power.

PowerHouse, a subsidiary of American Real Estate Partners, last week unveiled plans for a 300-megawatt data center campus in Charlotte. Through a joint venture with real estate investment firm Town Lane, PowerHouse plans to build 2.5M SF of data centers across five buildings by 2027, with the potential to increase capacity on the site to as much as 500 MW.

The 122-acre site sits 10 miles from downtown Charlotte, a city that, while not a digital infrastructure hinterland, barely cracks the list of second-tier data center markets. 

This came just days after PowerHouse announced a separate joint venture with fellow data center firm Chirisa and asset manager Blue Owl to build a series of data centers anchored by artificial intelligence cloud provider CoreWeave. In a deal that could eventually see the deployment of more than $5B, the JV’s list of development sites includes locations like Pennsylvania, Kentucky and Nevada, with the first project a 120-megawatt facility on 350 acres near Richmond, Virginia. 

PowerHouse’s suddenly swelling development pipeline builds on a portfolio that began in the heart of Northern Virginia’s Data Center Alley but has steadily expanded into secondary and tertiary markets. The firm has 30 data centers in development or underway, representing 2.3 gigawatts of capacity. 

In an interview with Bisnow last month, Monaco discussed the company’s growing footprint that is increasingly pushing outside of primary data center hubs. He said delivering data centers in these emerging markets requires a balancing act that limits risk while anticipating the needs of the largest Big Tech tenants. 

This interview has been edited for length and clarity.

Bisnow: You just started at PowerHouse over the summer after a long tenure at Equinix. These are two companies with really different business models, development philosophies and roles within the data center ecosystem. Has that been a challenging transition? 

Monaco: I’d spent 10 years at Equinix, running the asset management group there. Equinix plays mainly in the retail data center space, small cages focused on specific types of workloads, almost all in major metro areas, selling small chunks on a retail basis. That is a great business, and that will continue to be a great business.

But what’s exciting about PowerHouse is that it’s focused on this transition from campuses of 100 MW with a few buildings of 20 or 30 MW apiece to now the buildings being 100 MW, and the campus is maybe a gigawatt. That’s one of the reasons I’m here. 

These gigawatt campuses are needed not only to support AI and this massive AI demand surge but also just to sustain growth of the standard cloud. AI is just another layer on top of an already very fast-growing business. That’s really exciting to me. If I can spend the next 10 years helping to enable that, I’ll be very happy. 

Bisnow: I’m curious about PowerHouse’s development and site selection strategy. Your portfolio and development pipeline are spread across a diverse range of markets, from the heart of Data Center Alley in Northern Virginia and other primary markets to the Carolinas, Reno and places like rural Spotsylvania, Virginia, that are way outside the box. What’s the driving principle or North Star when it comes to where you’re looking to buy land and build?

Monaco: Speed to market is very significant, but it’s also about other factors. We have relationships with a lot of the major players, and it’s about understanding them and their needs. That means thinking about different kinds of workloads as it relates to geography.

For example, Ashburn in Northern Virginia has a vacancy rate so small you can’t even see it on the charts comparing it with other markets. And so, if you were to offer a big player 50 MW or 100 MW or really any quantity in Ashburn, they’re going to jump to take that. 

However, as tenants move towards more AI workloads, some of that is less sensitive to latency. So we try to think about the path of development: Where are other locations where they’re close enough that they’re still going to be suitable for most of these other workloads? In the case of Northern Virginia, that’s very clearly coming down Interstate 95 where there’s a lot of fiber, places like Spotsylvania and Richmond. 

The Northern Virginia market used to have a certain radius. Now maybe the radius of the circle gets a little bigger. Crystal balls aren’t available, but in a lot of global markets, it’s easy to see where the opportunities are to expand the circle. Our goal is to be proactive, figure out where those opportunities are and lead the way there.

Bisnow: That balancing act when it comes to secondary and tertiary markets is interesting. On one hand, you need to bank land in locations that can get power quickly so that when major tenants say they need hundreds of megawatts in that region, you can meet their timelines. On the other hand, you don’t want to be too speculative and get too far ahead of demand, no matter how robust it is. How do you make sure you’re not overextending when it comes to land acquisitions? 

Monaco: It’s a fine line for sure. We talk to the tenants a lot. The relationships and the amount of sharing that happens is pretty significant. It’s really more of a partnership in most cases, where you’re looking at road maps together and figuring out where things are going. 

There’s always going to be some risk, though, of course. But in general, having so much demand out there is a luxury. There’s also a real premium placed on having a lot of capacity in one place — 500 MW or a gigawatt in one place is very attractive. For the largest tenants, being able to build in that scalability is really important. 

It’s also worth mentioning that this kind of development — and the different things that need to happen on these projects — are inherently somewhat modular. Take a switching station that needs to be built by the utility: Most switching stations are 300 MW, so even if you’re building a gigawatt campus, it’s not like everything goes in on Day 1. 

Courtesy of PowerHouse

PowerHouse Senior Vice President for Asset Management and Development Matt Monaco

Bisnow: So you’re saying that you mitigate some of the risk by building these massive projects in tiers over time? 

Monaco: Exactly. It’s about figuring out places where the type of scale that tenants are looking for is possible, then, over time, figuring out the right way to meet those needs with one tenant or two tenants and being ready for different scenarios. 

There are some players out there that have gone after massive sites with thousands of acres and things like that. That’s not for us. I don’t want to say that’s a bad strategy — it might end up being an amazing strategy. But it’s not for us. 

Bisnow: In terms of site selection and willingness to go outside of major markets, to what degree is it a game of follow the hyperscaler? It seems like when Amazon, Microsoft or Google builds a big campus in a new region, third-party developers start snapping up land around them. 

Monaco: They do. A lot of times when you see a lot of operators move into a region, it’s just that the area has good infrastructure or there are good incentives like tax abatements being offered or things like that. But there’s the natural tendency for operators to follow the large players. 

Sometimes the thinking is just that if the big hyperscale tenants are in an area, they’re going to need more capacity eventually, so you want to be there and ready to serve them whenever that is. But the second part, which is more interesting, is how the network effect takes hold to turn a few hyperscale flags planted into a self-reinforcing loop.

There are real benefits to clustering, especially when it comes to fiber. You get a couple hyperscale flags planted in a new area due to incentives or water availability or something like that, and all of a sudden, you’ll have a lot of fiber in an area that didn’t have a lot of fiber in the past. All of a sudden, you’ll have a community of tradespeople and experts, and you get an economy of scale and significant value in clustering in the area.

Bisnow: At the moment, data center development is all about trying to get power quickly as utilities struggle to keep up with demand. I see firms taking a couple of different approaches to expediting power at their sites. Companies are working more proactively with utilities to jointly solve some of these issues. At the same time, some are taking more creative approaches, like on-site power generation, co-development with energy firms and “behind-the-meter” deals with power providers. What’s PowerHouse’s approach to energy acquisition? 

Monaco: With utilities, it’s always about partnership. We have our business case, the utility has theirs, and it’s about finding the best risk-adjusted way to get there. This is a big part of our approach, to be very collaborative and make sure all parties are on the same team.

There’s a lot of different ways to partner. In some cases, it’s the small stuff. For example, if there are utility lines that have to be run to bring power from a high-voltage line to a data center building, we can divide and conquer on that. We’ll work in parallel where we focus on negotiating easements and things like that to help accelerate things while the utility focuses on the elements that only they can do. 

In terms of on-site generation, co-generation and that kind of thing, it’s very much on a case-by-case basis. It can be a bridge in the first phase of a project until utility power is available. There are others in the industry who feel that co-generation should be the next big thing and that every data center should have a giant power plant next to it.

Bisnow: That kind of project has been in the news over the past two months, with Amazon acquiring a data center campus abutting a nuclear power plant and two other nuclear-adjacent data center campuses being proposed. 

Monaco: The AWS deal with Talen Energy was a huge move for them. It’s really the epitome of “behind the meter.”

With the speed to market such an important element in the landscape right now, in order to get the amount of power the industry needs in the amount of time we need it, the land has to be in close proximity to existing power infrastructure. 

We need to power fast, so we need to go to locations where that’s possible. It takes a good 10 years to get new generation and new transmission capacity built, so bringing the data center to the power rather than bringing the power to the data center is how we’re thinking about it. 

We’ll continue to see creative dealmaking and solutions happening in the market to be able to get a lot of scale on accelerated timelines. The specifics will dictate what utilities are willing to do, but we’re going to keep seeing these types of unique arrangements. 

Bisnow: Utilities were really caught off guard by the surge in demand from data centers, with data center requests for grid connections doubling or tripling in many markets. But as utilities invest billions of dollars to upgrade grid infrastructure, there’s also concern that some of this data center demand is a mirage — that they are speculative requests that may never materialize. Is it possible to separate the wheat from the chaff here? 

Monaco: The first hurdle is just looking at who it is requesting power. If the requests are coming from some of the very largest users for a self-build, that’s not a guarantee, but it’s a pretty good indicator that request is probably real. That’s especially true if there’s existing relationships and history with the firm making the request, as is often the case between the actual humans who are having these discussions.

That said, we’re talking about very large-scale campuses here, and there are companies out there asking for very large numbers of megawatts just to see what’s possible. I think that’s a tough strategy to take and may not always work out so well. 

For the utility, it’s about them understanding developers’ strategies and business plans. What are they really about? How informed are they? 

There are a lot of real estate developers out there who haven’t done data centers before who are looking at this industry and thinking, how hard could it be? They’re jumping in and asking the power company for 500 MW. There’s a fair amount of that kind of activity driving those numbers up.