Tariffs and Commercial Real Estate

Apr 13

The commercial real estate market is facing a mix of challenges. One takeaway from the most recent TreppWire podcast is that property insurance costs are likely to rise due to the impact of tariffs on construction materials. These tariffs, which are likely to drive up the cost of building supplies, will directly affect the replacement costs of commercial buildings. As a result, property insurance premiums would increase, adding to operating expenses for commercial property owners and shaving margins.

Meanwhile, as earnings season kicks off for major U.S. banks, another emerging concern is the rise in credit card delinquency rates. JPMorgan recently reported that the portion of loans in its credit card business deemed unrecoverable has reached a 13-year high. According to Bloomberg, nearly 2% of credit card debt at banks is now 30 days or more overdue. Additionally, 11% of credit card holders are only making minimum payments on their outstanding balances, further deepening concerns about consumer financial health.

Broader economic sentiment among businesses and consumers continues to decline. A recent University of Michigan poll revealed that consumer confidence is at a low point, with a growing number of individuals expecting increased unemployment in the year ahead. The percentage of respondents anticipating higher unemployment was the highest it has been since 2009.

Tariffs and Commercial Real Estate

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