Navigating The Impact of Tariffs on Commercial Real Estate

On April 2, 2025, President Donald Trump proposed a sweeping set of tariffs on imports from more than 90 countries. These new measures—stacked atop previously announced 10% tariffs on all U.S. imports—are already prompting shifts across the commercial real estate (CRE) landscape. Crexi sees significant implications, both risks and opportunities, for construction costs, leasing trends, and investor strategy as trade uncertainty filters through to real estate. 

The impacts are expected to vary by asset class and market, and while the future is far from certain, one thing is clear: CRE stakeholders must prepare for dynamic conditions ahead. Below, we outline how different property types are being affected and what investors, brokers, and developers should watch—and do—now.

Industrial Real Estate: Disruption Today, Potential Expansion Tomorrow

Crexi expects the industrial sector to face near-term disruption with longer-term potential upside. Tariffs on materials like steel and aluminum have already increased warehouse construction costs by up to 10%. Steel prices alone rose 20% this spring. That pressure is slowing speculative development and triggering underwriting revisions—factors likely to drive up current rents and valuations for existing assets, benefitting existing owners. 

Leasing activity near major ports, including in Southern California, is cooling as import-heavy tenants wait for policy clarity. But at the same time, a shift toward domestic manufacturing could unlock new demand in industrial corridors—especially in lower-cost, infrastructure-ready secondary markets.

Conversely, Crexi’s platform shows rising investor interest (based on search behavior) in metros like Detroit (+31%), Houston (+17%), and Miami (+19%), where users are increasingly searching for industrial properties aligned with reshoring narratives. Persistent tariffs would increase demand for domestic logistics and production facilities, particularly in markets with favorable infrastructure and access to labor. Long-tail, this could also drive interest in secondary industrial markets where land is cheaper and development barriers are lower.

"If reshoring accelerates, we'll likely see a revaluation of industrial corridors in markets that haven't historically been national priorities," said Eli Randel, Crexi's Chief Operating Officer. "Technology platforms like Crexi can help investors analyze and surface those overlooked opportunities as dynamics shift."

Multifamily Housing: Undersupply Could Get Worse

Crexi sees tariffs compounding the U.S. housing undersupply problem. Elevated costs for lumber, gypsum, and wiring are making new development less viable, especially in high-need areas. This could prolong the existing supply gap, intensifying upward rent pressure.

For owners of stabilized assets, this is likely a net positive. Limited new supply supports rent growth and asset appreciation, particularly in high-barrier metros. Still, the affordability gap is widening, a growing concern for policymakers and tenants alike, especially those in lower-income urban markets.

Investor sentiment, however, remains optimistic, with submitted offers for multifamily on Crexi up nearly 10% in Q1. As Randel puts it, “If the market remains level-headed, buyers will still be willing to transact under the expectation that improved macro conditions may be on the horizon while new supply remains in check. Coupled with an undersupplied housing market, rental demand may grow lending to rate growth in many markets.”

Office and Retail: Caution in a Cloudy Economic Environment

Crexi expects caution in office and retail as macroeconomic uncertainty clouds corporate and consumer outlooks. Many tenants are pausing office expansions or lease renewals, waiting for more economic clarity. Weak business confidence often translates into slower leasing and fewer long-term commitments. However, Blackstone made its first office acquisition in NYC just a few months ago and Google recently ordered its workers back to the office, signalling a light at the end of the tunnel for the sector that’s relatively unimpacted by tariffs. 

Retail is more nuanced. On one hand, tariffs may squeeze margins for tenants dependent on imports. Small businesses, especially those that rely on off-shore imports, are facing mounting pressures and limited product supply - most recently, major retailer executives have influenced the Trump administration’s stance on imports, warning of empty shelves. On the other, necessity-based retail—including grocers and service-oriented strip centers—shows consistent resilience. 

We’ve observed a slight decline in national retail property searches on Crexi, but strong activity persists in subtypes like medical retail and neighborhood centers. Blackstone and other major institutional players are taking a cautious stance and adjusting underwriting to account for higher costs, longer project timelines, and potential consumer pullback. 

“Understanding tenant exposure to tariffs may become a key part of due diligence,” Randel said. “brokers and buyers may begin to factor import risk into their underwriting models.”

Investment Climate: Flight to Safety and Potential Policy Reactions

In times of uncertainty, we see capital shifting toward hard assets with reliable income. If tariffs weaken GDP and lead to recessionary pressure, the Federal Reserve may respond by cutting interest rates, creating favorable borrowing conditions for CRE.

High-quality, cash-flowing properties with strong tenancy could attract flight-to-safety capital, especially in multifamily and industrial. However, investor behavior will depend heavily on how inflation and interest rates evolve alongside tariff implementation.

Real estate’s value proposition lies in its physicality: buildings can be touched, leased, and modeled more predictably than volatile financial assets.

What to Watch: Metrics and Policy Signals

To track the impact of tariffs on CRE, stakeholders should monitor:

• Construction starts and permits (Census Bureau, Dodge Data)
• Port activity and cargo volumes (Port authorities)
• Industrial leasing velocity (brokerage firm research)
• Changes in materials pricing (Producer Price Index, BLS)
• Federal Reserve commentary on rates and inflation outlook
• Stock market

CRE owners should also be engaged in ongoing conversations with their brokerage team, asking questions including the following to gain a clearer understanding of property-specific details:

• Which tenants in this property are most exposed to tariff-related risk?
• How are current construction timelines and costs being affected in this market?
• Are you seeing cap rate adjustments for deals in this asset class due to trade uncertainty?
• What alternative markets are showing strong interest from investors right now?
• Can we include protective language in the PSA in case conditions worsen?

Ending on a Practical Note: Opportunities Amid Disruption

While the future is anything but certain, we believe disruption creates opportunity for informed investors. Markets poised to benefit from reshoring could see long-term industrial tailwinds. Existing multifamily assets may outperform amid persistent housing shortfalls. And necessity-based retail could offer defensiveness in an unpredictable economy.

Crexi's platform is built for this kind of environment—helping users uncover undervalued opportunities, monitor market shifts, and complete transactions confidently.

“Data insights can't eliminate uncertainty, but it can make decision-making faster and more transparent,” said Randel. "That's what we're focused on: giving people an edge when market conditions shift."