Investors have heavily invested in warehouses and distribution centers near major U.S. ports, making coastal industrial properties highly coveted during globalization. However, the recent implementation of significant tariffs by the Trump administration threatens to disrupt global trade, potentially reducing demand for these prime warehouse spaces. This shift could lead to lower occupancy rates, diminished property values, and a slowdown in industrial development in port cities.
The tariffs have already impacted warehouse-focused real estate companies. Prologis, a leading industrial real estate investment trust (REIT), has seen its shares decline by approximately 12% since April 2, while CBRE Group’s shares have dropped by 8%. These companies had previously benefited from evolving consumer habits and complex logistics demands from major retailers like Amazon and Walmart. However, analysts now warn that their heavy concentration in logistics could become a vulnerability if international trade slows, potentially leading to an oversupply in warehouse capacity.
Shipping companies are also experiencing disruptions. A.P. Moller-Maersk has reported that the new tariffs are delaying goods already in transit, as customers, including major retailers, opt to store cargo at U.S. ports rather than clearing customs immediately. This cautious approach aims to gain more clarity on the evolving trade policies, resulting in overcrowded storage facilities and increased demand for bonded storage.
The combination of reduced trade volumes and increased storage costs is expected to place financial strain on warehouse operators, particularly those with significant exposure to international trade. As the situation develops, stakeholders in the coastal warehouse market will need to adapt to the changing landscape, potentially reevaluating investment strategies and operational models to mitigate the impact of ongoing trade disruptions.
