The imposition and potential of new tariffs are causing significant hesitation among industrial tenants, leading to delays in real estate decisions. Landlords report that many occupiers are adopting a “wait and see” stance, uncertain about the future impact of these trade policies. This uncertainty stems from both enacted and proposed tariffs, with tenants concerned about potential price increases and their effect on consumer demand.
President Trump’s plan to introduce 25% tariffs on non-US-made cars, coupled with existing tariffs on goods from China, Canada, and Mexico, has amplified this unease. The resulting fluctuations in trade policies and declining consumer confidence are prompting tenants to postpone expansion plans.
Industry experts, like Carolyn Salzer from KBC Advisors, highlight that tenants are pausing due to the unpredictable trade landscape. Laura Clark of Rexford Industrial notes that tenants are requesting extended decision-making periods to gain clarity.
While the tariffs create challenges, some anticipate that manufacturers will increase domestic operations, benefiting developers and landlords. However, global companies like Prologis are witnessing a decrease in customer space requirements, reflecting a general market cautiousness.
Companies such as Capital Property Trust are adjusting their strategies by diversifying into less tariff-sensitive sectors. In Texas, Constellation Real Estate Partners experienced a leasing slowdown, with tenants waiting for tariff-related clarity.
The manufacturing sector is expected to see growth as companies shift operations to the U.S. Conversely, smaller e-commerce businesses are particularly vulnerable to the uncertainty. The automotive, housing, and construction industries are also projected to be significantly impacted.
Economists, such as Christopher Thornberg from Beacon Economics, warn of potential retaliatory measures from trading partners, emphasizing the need for a de-escalation of the trade conflict.