CBRE Cautious, Cushman Confident as Tariff Pressures Mount

Tuesday, May 6, 2025

• Two takes on tariffs: Two of the largest commercial real estate companies have differing opinions about the effects of tariffs on commercial real estate.

• Policy paradox: Austin built fast, spent big, and led the nation in affordable housing efforts, yet prices still soared.

• Transatlantic slump: Trump’s trade war appears to be dragging down European commercial real estate deal volume.

• Multifamily outlook webinar: Join us May 20th to learn how data and tech are helping multifamily leaders adapt to tighter margins and rising renter demands. Sign up

Editor’s Pick

CBRE Cautious, Cushman Confident as Tariff Pressures Mount

Leading commercial real estate firms CBRE and Cushman & Wakefield are voicing divergent outlooks as rising trade tensions and looming tariffs continue to pressure the industry. CBRE performed exceedingly well in the first quarter, with global leasing activity jumping 19%, with U.S. office leasing hitting record highs. Investment sales rose 13% and the firm raised nearly $5 billion from investors in the early months of the year. Still, CEO Bob Sulentic struck a measured tone on the company’s earnings call, acknowledging that tariff-driven uncertainty is already slowing deal momentum.

Despite the strong start, CBRE is holding its full-year guidance steady and bracing for potential recession conditions. Sulentic said the company is positioned to take advantage of M&A opportunities in a downturn.

Cushman & Wakefield, by contrast, leaned more bullish. The firm notched its third straight quarter of double-digit leasing gains, with leasing revenue up 14% and overall revenue rising 5%. CEO Michelle MacKay said tenants are locking in long-term commitments, with average lease lengths stretching to 77 months, an encouraging vote of confidence in the office market’s staying power.

“We’re not witnessing a freeze in decision-making,” MacKay said in its earnings call. She also highlighted a strategic pivot within the firm’s services division, now 70% focused on mechanical and engineering, a bet on stability even if the economy gets rougher.

Both companies agree that the broader landscape is shifting. CBRE research estimates that if new U.S. tariffs are fully implemented, they could slice 0.4 percentage points off GDP growth this year, and push core inflation above the Fed’s 2% target. That cocktail of slower growth, stickier inflation, and higher borrowing costs could delay leasing and capital plans across asset classes.

As we head into the second quarter, CBRE, Cushman, and the rest of the industry are cautiously optimistic. The industry is watching Washington closely in a market tilting between momentum and macro volatility.

Overheard

Austin's Struggles Show Just How Hard Housing Affordability Can Be

Austin has long been the poster child of sustainable urban growth. The city's population has grown steadily over the past few decades, it has now become the tenth largest metro in the country. To keep up with the pace of growth, Austin has also been feverishly growing its housing stock. Austin has permitted more new affordable housing development per capita than any other city in America in the last few years. The city has also invested heavily in affordable housing initiatives, including a $350 million bond for affordable housing and another $300 million anti-displacement fund from a transit bill.

Even with the pace of growth and support for affordable housing, Austin has still not been able to significantly lower the cost of housing. Median home price rose by 58% from 2017 to 2022 alone. Rental housing prices have come down a bit this year. Zillow data shows that the average rent is down around 19 percent year-over-year, so there has been some relief to the city's residents. But, it is hard to say if these price drops were due to the increase in supply of affordable housing or a larger economic downturn.

European Commercial Property is Not Immune to Trump's Trade War

The negative effects of President Trump's fluctuating tariffs is spilling over into the global commercial property market. European deal volume, which had significant gains at the end of last year, has dropped in the first quarter of 2025. Only €41 billion of European commercial real estate changed hands in the first three months of the year, according to a new report from MSCI, the second lowest quarter since 2012.

Previously, there was hope that Europe could stand to gain from America's war on free trade. Last month a report from Cushman & Wakefield predicted that a return of manufacturing to Europe and the devaluation of the dollar could make European real estate more attractive to global investment. As new data comes out we will learn whether a slowing American economy will benefit European real estate or if the unpredictable volatility will put investors into "wait-and-see" mode.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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