Will Tariffs Impact Commercial Real Estate?

Navigating Tariffs: Economic Growth, Inflation and CRE Outlook ​

Tariff Announcements Introduce Economic Uncertainty ​

• This past week, the U.S. announced significant tariff increases on Canada, Mexico and China ​

• Canada and Mexico each negotiated 30-day delays, while China retaliated with tariffs on American goods ​

• Potential trade wars with Canada, Mexico and China could impact economic growth and inflation in the U.S. ​

Economic Growth Under Pressure; Inflation Risks Heightened ​

• Tariffs could slow U.S. GDP growth to 0.7% to 1.8% in 2025, down from the 2.2% forecast ​

• Inflation could rise by 0.5%, pushing it back to the 3.5% range ​

• Higher inflation could prevent the Federal Reserve from cutting interest rates ​

Commercial Real Estate Faces Indirect Headwinds ​

• Industrial and retail sectors may see reduced space demand from tenants as consumer spending declines ​

• Higher construction costs could slow multifamily housing development ​

• Limited new housing supply may support rent growth, but it also increases the risk of regulatory actions such as rent controls ​

As of 2022​
Sources: Marcus & Millichap Research Services, The Observatory of Economic Complexity​

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