How Tariffs Are Rewiring Logistics

Over a year on from “Liberation Day,” trading partners and trade routes have changed, propelled by a shift by firms toward importing from countries with more favorable tariff terms. While the effects have not been immediate on industrial commercial real estate, they are starting to cycle through, proving to be a major impediment to the property type reaching a stable growth path. Rather, performance metrics for the sector have decelerated significantly, although the blame cannot be placed squarely on trade policy alone. The unfortunate timing of trade policy uncertainty since the start of 2025 has coincided with a slowing sector where demand growth began a period of natural normalization following exuberant expansion within the sector, both in terms of vigorous supply growth and enthusiastic space uptake in the early 2020s. Previously sustained by strong e-commerce growth and investments in domestic manufacturing, industrial performance is now strained as these drivers have slowed significantly amid concerns over macroeconomic uncertainty, including employment and trade policy.

Languid demand growth related to consumer spending on goods stemming from job market uncertainty and headwinds related to broader trade policy have finally caught up to the property type across subsectors. Effective rents slid in the first quarter of this year, albeit negligibly. This is notable because it is the first quarter since the third quarter of 2011 that rents have declined over a nearly 15-year span.

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