Evaluating the Impact of Trade Policies on Real Estate

My First Take: Trump’s Trade War Escalation & Its Impact on Commercial Real Estate Trump just slapped an additional 25% tariff on Canadian steel and aluminum, bringing total tariffs to 50% on imports from our largest metals trading partner. Here’s what matters for CRE: ➡️ Canada supplies ~20% of U.S. steel imports and over half of our aluminum. This isn’t a blip. It’s a real jolt to construction costs, which were already flirting with unsustainable levels. Every ton of steel and aluminum coming from Canada just got much more expensive. ➡️ Development math just got harder. Ground-up projects? Margins were already thin. Now you’re plugging in higher material costs on top of higher interest rates? Good luck making those pro formas pencil—unless land prices drop (which takes a long time to reset). ➡️ Existing assets just became more valuable. Replacement costs are heading north. And if new supply slows down, the value of stabilized, well-located assets with durable cash flow just increased. This is especially true for industrial and net lease retail, where new construction was the biggest threat to pricing power. ➡️ CapEx budgets? Wrecked. Steel frames, aluminum windows, HVAC retrofits… all just jumped in price. If you’ve got major repositioning or sustainability upgrades planned, you may need to reprice—or rethink. ➡️ Expect more caution in the capital markets. Trade volatility doesn’t help a market already teetering on uncertainty. Investors and lenders are going to underwrite higher construction costs and longer delivery timelines, if they move forward at all. Cap rates may drift wider in sectors tied to manufacturing, logistics, and construction-heavy assets. This isn’t theoretical. Steel and aluminum are the bones of commercial real estate. And when the cost of bones spikes, the entire body—development, pricing, capital flows—feels it. 👀 Watch for: Delayed or canceled projects Upward pressure on rents (developers will try to pass costs through) Stronger demand for existing product (especially Class A with minimal CapEx) What’s your take? Is this the start of something bigger—or just another headline? Let’s see how the market digests this one. #CRE #NetLease #ConstructionCosts #IndustrialRealEstate #TradeWar #CapEx #FirstTake

Most CRE investors are watching interest rates and cap rates. They’re playing the wrong game. The real market mover? Trump’s dollar policy. If his administration weakens the dollar, CRE could see major shifts. Why does the strength of the dollar matter? A weaker dollar impacts CRE in four key ways: ↳ Attracts foreign buyers, driving up prices. ↳ Interest rates could rise unpredictably. ↳ Construction and operating costs increase. ↳ Supply chains face disruption from increased costs. For decades, America championed a strong dollar to keep borrowing costs low. But Trump? He’s pushing the Mar-a-Lago Accord, a strategy to weaken the dollar, rebalance trade, and boost U.S. manufacturing. The Catch: Trump’s plan is internally inconsistent ↳ Wants a weaker dollar… but tariffs could strengthen it. ↳ Wants lower rates… but his policies could push them higher. ↳ Wants to reduce the trade deficit… but a weak dollar may not do it. There are significant implications to CRE of this dollar dance: CRE Fallout #1: Foreign buyers flood the market ↳ A weaker dollar makes U.S. real estate cheaper for global investors. * Problem: Investors caught up in rising prices without strong fundamentals. CRE Fallout #2: Inflation hammers construction & operations ↳ Higher import costs for steel, concrete, and electrical components. ↳ If inflation spikes, the Fed holds rates higher for longer. ↳ Development costs surge, making new builds tougher. CRE Fallout #3: Borrowing costs soar ↳ A weaker dollar deters foreign investors from buying U.S. Treasury bonds. ↳ Higher Treasury yields → higher commercial loan rates. ↳ If you’re not locking in financing now, you’re making a mistake. CRE Fallout #4: Trade wars disrupt supply chains ↳ Tariffs lead to retaliation, raising costs for retailers, warehouses, and industrial tenants. ↳ Global supply chain-dependent sectors take the biggest hit. What can CRE investors do? ↳ Secure long-term debt now – Today’s rates may be a bargain. ↳ Don’t chase overpriced assets – Foreign capital inflates prices, but fundamentals still matter. ↳ Lock in costs early – Developers should hedge against material price spikes. ↳ Reevaluate capital structures – Traditional leverage strategies may no longer work. Most investors ignore currency risk. This time, it could cost them. If Trump follows through with the Mar-a-Lago Accord, CRE’s rules will change overnight. Are you ready? *** Stay ahead in uncertain times. Subscribe to my free newsletter - link in my profile Adam Gower Ph.D.

📊 Trade Deficit Surges—What It Means for Passive Real Estate Investors 📊 The U.S. goods trade deficit jumped by 25.6% in January, raising concerns about rising costs and inflation—factors that directly impact real estate investments, especially in flex, office, and retail spaces. With new tariffs on imports from Mexico, Canada, and China set to take effect soon, it’s time for investors to reassess their strategies. Why Should Passive Investors Care? 1️⃣ Rising Costs for Renovations: Tariffs on imported materials like steel and HVAC systems could drive up renovation costs for office and retail properties, cutting into returns. 2️⃣ Inflation & Rate Hikes: A widening trade deficit might push the Fed to raise interest rates, impacting returns on deals with variable-rate debt. 3️⃣ Tenant Challenges: Higher costs could hurt tenant margins, affecting occupancy rates and rent collection—especially for office and retail investors. How to Protect Your Passive Investments: ✔️ Focus on Fixed-Rate Deals: Syndications with fixed-rate debt can shield returns from interest rate hikes. ✔️ Prioritize Creditworthy Tenants: Diversify into assets with stable, essential-service tenants. ✔️ Stress-Test Cash Flows: Ensure proformas account for rising costs and potential delays. ✔️ Maintain Cash Reserves: Choose syndications with strong cash reserves to weather short-term disruptions. 📊 Real-World Insight: A recent report by CBRE suggests that tariffs on steel could increase construction costs by up to 15%. For investors in flex spaces, higher material costs can mean lower returns if budgets aren’t adjusted proactively. 🚀 Next Steps: As a senior IT leader, you’re accustomed to navigating volatility and making data-driven decisions. The same principles apply to passive real estate investing. Curious how to safeguard your passive income in 2025? 👉 Comment “PLAN” or DM me for a free Passive Wealth Assessment. What’s your strategy for navigating rising costs and potential interest rate hikes in 2025?

How Trump's Second Term Could Reshape Commercial Real Estate: With Donald Trump returning to office, the commercial real estate (CRE) sector is preparing for potential policy changes that could influence market dynamics, project costs, and workforce availability. Here’s an overview of the expected impacts in key areas and what CRE investors should anticipate: 1. Deregulation: Accelerating Growth? Historically, Trump’s stance on deregulation has benefited CRE by streamlining processes and reducing red tape. We may see: Opportunity Zones 2.0: New incentives to spur development in underserved areas. Eased Restrictions: A move that could reduce project timelines, especially for affordable housing. Consideration: Reduced regulations could accelerate project starts, but balancing short-term gains with consumer protections will be essential to avoid potential risks. 2. Tariffs: Higher Construction Costs & Inflationary Pressures Trump’s stance on tariffs could increase the cost of materials, impacting CRE development: Construction Materials Costs: Tariffs on imports from China and Mexico may inflate the prices of essential materials, increasing development expenses. Supply Chain Disruptions: Potential delays as developers seek alternative suppliers, which could slow project timelines and affect project quality. Impact: While some property owners may benefit from limited new construction, developers could face slimmer margins and project delays. 3. Immigration Policies: Workforce Challenges Immigration policies directly affect the construction labor pool, with an estimated 30% of construction workers being immigrants. Stricter immigration policies could: Exacerbate Labor Shortages: Fewer workers may lead to project delays and increased labor costs. Potential for Skilled Worker Visas: Targeted visa programs could help alleviate shortages if implemented, allowing skilled labor to fill gaps. Investor Insight: Expect higher labor costs and potential delays in project timelines, especially for large-scale developments. 4. Outlook for CRE Investors While Trump’s policies may present hurdles, deregulation and tax incentives could bolster investor confidence. CRE assets, traditionally seen as inflation hedges, remain attractive, especially in an inflationary environment. Investors should: Stay informed on evolving policies and adjust strategies to mitigate risks. 📲 Connect with The Cauble Group to learn more about navigating these shifts and how we can help you position your portfolio for success in an evolving market. #CommercialRealEstate #CREInvesting #PolicyImpacts #Deregulation #InvestmentStrategies