The announcement of new tariff measures by the Trump administration at the beginning of April 2025 is causing considerable unrest in global markets – with a noticeable impact on the commercial real estate (CRE) market. In an environment already burdened by high inflation and rising interest rates, the question arises: can real estate investors rely on a recovery, or is there a threat of a new setback?
Four scenarios for the future of CRE
Principal Real Estate analyzes four possible macroeconomic scenarios of how the new tariffs could affect the real estate market:
- Mild recession:
CRE is benefiting from falling interest rates, which compensates for weaker NOI (net operating income) growth momentum. Prices are rising slightly, and real estate is considered a safe haven. - "No Landing" scenario:
The economy remains stable, despite slightly higher inflation. CRE delivers solid returns (7-10% p.a.), supported by stable demand and positive fundamentals. - Stagflation:
A combination of high inflation, a stagnant economy and tight financing conditions is leading to price declines of more than 10% – a return to the negative environment of the early 1980s. - Economic standstill:
Consumption and corporate spending are collapsing. Although CRE could remain comparatively stable, price losses of up to 5% would still be expected – with strong sectoral differences.
Sector analysis: Profiteers and losers
Not all real estate segments are affected equally. Particularly susceptible are:
- Industrial and logistics real estate, as it is heavily dependent on global trade flows. Declines in consumption could have a direct impact on demand for warehouse space.
- Retail, despite its recent strength, is at risk from possible consumer restraint in the event of an ongoing trade conflict.
The rental housing market is better positioned: rising mortgage interest rates are supporting demand for rental apartments, while supply bottlenecks due to rising construction costs or stricter immigration policies could increase pressure on rents.
Focus on private debt, REITs and infrastructure
- Private debt remains attractive despite an uncertain environment, partly because many loans mature in 2025–2028 and have to be refinanced. Investors are increasingly focusing on quality and conservative valuations.
- REITs (listed real estate companies) are considered robust: they offer stable income, are comparatively cheaply valued and are currently outperforming other equity segments.
- Infrastructure is proving to be a stable anchor. Although new tariffs carry risks, existing projects are little affected. Energy infrastructure in particular could benefit – both in the USA and in Europe, where economic autonomy is increasingly being relied on.
Result
Tariffs and trade policy risks are not just a geopolitical issue – they have a concrete impact on investment strategies in the real estate sector. Whether recession, stagflation or a gentle upswing, the decisive factor will be how flexibly investors react to changing conditions. If you keep a close eye on sectoral developments and pay attention to quality, you can manage the risks – and take advantage of opportunities.
