Although it is still difficult to accurately assess the full impact of tariffs on the commercial real estate market, early signs have emerged in the retail and industrial sectors. According to observations by Whitley Collins, President of Global Consulting and Transaction Services (Tenant Representation) at commercial real estate services firm CBRE, some transactions have begun to stall.

"Looking at tariffs alone, retailers are the most affected, followed by manufacturing and distribution, so retailers are undoubtedly the most anxious group," Collins said in an interview last week. "The retail industry is trying to figure out 'what this means for our business,' so a large number of retail transactions are currently on hold, and the industrial sector is similar."

According to CBRE's first-quarter retail report, the U.S. retail real estate market (covering shopping centers, large-format stores, and power centers) recorded its first negative net absorption in the first quarter of 2025 since the third quarter of 2020 (the early pandemic period). This change reflects "a cautious start to the year as retailers reassess expansion plans amid uncertainty about economic growth."

CBRE's first-quarter industrial report also noted that many industrial warehouse tenants are taking a "wait-and-see" approach to real estate decisions, and the broadly implemented tariffs are expected to "significantly impact market activity." Meanwhile, the national industrial vacancy rate rose to 6.3%, the highest level since the second quarter of 2014 (more than a decade ago).

In contrast, Collins said the office market has seen only a small number of pauses, and not directly stemming from tariffs. For example, in Washington, D.C., there are a few transactions where tenants have expressed concerns about the cost of new space, due to uncertainty in the costs of furniture, fixtures, and equipment. Contractors and furniture manufacturers cannot lock in prices, potentially driving transaction costs up by 10% to 15%.

"When you think about it, this cost is only a small portion of the overall transaction, but it is enough to make tenants say, 'We want to hit pause until prices become clearer,'" Collins said. "This is different from the pauses in retail and industrial—those are pauses because tariffs will have a significant impact on the business."

Although the office market is still struggling with the impact of remote work trends, several healthy indicators in CBRE's first-quarter report show that the U.S. office market remained stable in the first quarter. The overall vacancy rate was 19%, flat compared with the same period last year, but still hovering near 30-year highs. Meanwhile, the quarter marked the fourth consecutive quarter of positive demand, with leasing activity up 18% year over year. Among major cities, Manhattan, Chicago, Los Angeles, San Francisco, and Boston saw year-over-year leasing increases, Atlanta was flat, while Dallas, Seattle, and Washington, D.C. saw declines.

Businesses choosing to renew leases accounted for 40% of overall leasing activity, up from about 30% before the pandemic. In the current uncertain economic environment, Jessica Morin, Director of U.S. Office Research at CBRE, expects this trend to continue.

"Not having to bear the costs of relocating and renovating space is an important reason for renewals," Morin said in an interview, adding that landlords willing to negotiate tenant-friendly terms to keep buildings occupied may also drive continued renewals. "For multiple reasons, I believe the momentum for renewals will remain strong."