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Pinpointing Tariff-Resilient Assets and Markets
Tariffs have been on everyone’s mind lately, from individuals studying their retirement portfolios to business leaders wondering whether a recession or inflation could result. Commercial real estate leaders are also determining how “tariff whiplash” might impact investment and construction plans.
A recent report by Hans Nordby, Transwestern’s Executive Managing Director, Research and Investment Analytics, acknowledged that the “various tax, regulation and tariff regimes” being pursued could generate a GDP drag in the near term. Additionally, “consensus forecasts are for growth to slow, but continue, and for inflation to tick up in 2025 before falling to long-term trends in 2026.”
He also noted that “current market volatility may present opportunities, particularly for well-positioned industrial and multifamily assets.” Additional points from the report included the following:
- Real estate could be well-positioned as an inflation hedge and “a source of value stability in the eventual tariff and trade regime,” Nordby wrote.
- Strategic and complex industries, such as pharmaceuticals, computer chips, steel, energy and autos, could be better positioned for expansion.
- Trade issues over the last decade have demonstrated where manufacturing in the industries mentioned above takes place. Target states include Arizona, Georgia, Ohio, Tennessee and Texas.
- Onshoring, country-of-origin diversifications and supply chain shifts are already taking place in the face of increased tariffs and anti-global sentiment.
- Increasing manufacturing activity should benefit the industrial and multifamily sectors, “especially in regions with labor force growth and pro-business policies,” Nordby commented.
- Expanded supply-chain demand should support industrial property absorption. Meanwhile, job and economic growth, combined with the high cost of home ownership, could benefit apartments.
With the above in mind, Nordby suggested that industrial, multifamily and healthcare real estate—asset types with high demand prospects—could perform well in a high-tariff environment. Furthermore, metropolitan areas that rely on domestic in-migration (versus coastal markets that depend on international immigration) should also do well.
- ◦Economy
- ◦Policy/Gov't
