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On April 2nd 2025, the U.S. enacted a sweeping set of import tariffs—marking the most significant overhaul of trade policy in decades. The move included a 10% baseline tariff on all imported goods, with additional “reciprocal” tariffs reaching up to 50% for certain countries and industries. This wide-ranging policy is expected to send ripple effects across the U.S. economy, including substantial implications for commercial real estate (CRE). From industrial and retail to hospitality and data centers, sectors across the property market are evaluating how to navigate this evolving landscape.



<h2 class="wp-block-heading">Overview: Who and What Do the Tariffs Target</h2>



The new tariffs apply to goods from over 180 countries, with particularly steep increases for imports from China (34%), the EU (20%), and others deemed to engage in “unfair” trade practices. Targeted products include automobiles (25%), electronics, machinery, textiles, and construction materials such as steel and aluminum. While some sectors—like pharmaceuticals and critical minerals—have received temporary exemptions, the broad scope of these measures is expected to influence both upstream suppliers and end-users across real estate.



<h2 class="wp-block-heading">Industrial &amp; Logistics: Cautious Short-Term, Optimistic Long-Term</h2>



The industrial and logistics sector is among the most directly impacted. Rising tariffs on construction inputs are already inflating build-out costs. According to CBRE, this surge may slow warehouse development pipelines and increase rents in high-demand logistics hubs. At the same time, rising import costs could lead companies to re-shore production, spurring long-term demand for domestic manufacturing and distribution space.



Still, CoStar reports that many occupiers are taking a “wait-and-see” approach to leasing decisions due to uncertainty around supply chain disruptions and pricing volatility. Port-centric markets may see softening in warehouse activity, while inland logistics corridors could benefit from more diversified supply chains.



<h2 class="wp-block-heading">Retail: Tariff-Driven Price Hikes Pressure Tenants</h2>



Retail properties face some of the most immediate risks. Tariffs on imported consumer goods—ranging from apparel to electronics—mean higher prices for shoppers. Analysts estimate that consumer prices could rise by 1.3% annually, potentially reducing discretionary spending by over $2,000 per household.



This could directly affect occupancy and foot traffic in malls, lifestyle centers, and big-box retail, as brands cut back on expansion plans or shutter underperforming locations. Essential goods providers like grocery chains may prove more resilient, while discount retailers could see a boost as consumers trade down.



<h2 class="wp-block-heading">Office: Indirect Risk via Broader Economic Uncertainty</h2>



The office market is less directly tied to tariffs but could still experience fallout if economic conditions deteriorate. A tariff-induced slowdown could lead to reduced hiring and lower capital spending among office tenants, particularly in finance, tech, and business services.



CBRE notes that while fundamentals remain solid today, companies are increasingly factoring macroeconomic risks into their real estate planning—delaying expansions or subleasing excess space in uncertain markets.



<h2 class="wp-block-heading">Multifamily: Housing Costs Up, Rent Demand Stable</h2>



Multifamily real estate is feeling the pressure from rising construction costs, particularly for materials like lumber, aluminum, and imported fixtures. CoStar projects that the elevated costs could slow new housing deliveries, tightening supply and pushing rents upward in the medium term.



At the same time, if tariffs contribute to inflation or job losses, affordability concerns could grow—especially in Class B and C housing segments. However, higher homeownership costs may also keep more renters in the market longer, offering a stabilizing effect for operators.



<h2 class="wp-block-heading">Hospitality: Operational Costs and Travel Demand at Risk</h2>



The hospitality sector is grappling with rising costs for imported furniture, fixtures, equipment (FF&amp;E), and food and beverage products. According to CoStar, tariffs are likely to raise both upfront development expenses and ongoing operational costs, particularly for full-service and luxury hotels.



Meanwhile, leisure and business travel could decline if tariffs slow economic activity or erode consumer confidence. International travel may also soften if foreign governments impose retaliatory tariffs or restrictions—putting further pressure on urban hotels that rely heavily on global tourism.



<h2 class="wp-block-heading">Data Centers: Infrastructure Buildouts Hit by Import Costs</h2>



Data centers, a rapidly expanding asset class, are not immune. Tariffs on specialized equipment like high-density servers, cooling systems, and imported steel are expected to increase development costs significantly. CoStar warns that rising prices for these mission-critical components may delay or downsize planned facilities, especially in secondary markets where margins are tighter.



This could have cascading effects on cloud providers and enterprise tenants, potentially leading to higher service costs or limited space availability in key metros.



<h2 class="wp-block-heading">Final Thoughts: Monitoring Commercial Real Estate Tariffs</h2>



The newly imposed commercial real estate tariffs are reshaping sector dynamics across the board. While industrial and logistics properties could ultimately benefit from re-shoring trends, near-term headwinds exist due to cost pressures and supply chain uncertainty. Retail and hospitality sectors may face the toughest adjustments, while office, multifamily, and data centers experience more nuanced but still impactful challenges.



For investors, developers, and tenants, the ability to adapt to pricing volatility, shifting demand, and evolving supply chains will be key. Staying informed and responsive will help commercial real estate stakeholders navigate the opportunities and risks these new tariffs introduce.



Sources:



<ul class="wp-block-list">
<li><a href="https://www.cbre.com/insights/briefs/on-again-off-again-tariffs-and-commercial-real-estate">CBRE: On-Again, Off-Again Tariffs and CRE</a></li>



<li><a href="https://www.costar.com/article/826627750/tariffs-threaten-to-push-data-center-project-costs-higher">CoStar: Data Center Construction Faces Tariff Challenges</a></li>



<li><a href="https://www.costar.com/article/459944125/the-effects-of-trump-administration-tariffs-on-the-hotel-industry">CoStar: Tariff Impacts on Hospitality Industry</a></li>
</ul>

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