Sifting Through the Rubble of the Tariff REIT Selloff

Wednesday, April 9, 2025

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Federal Policy

Sifting Through the Rubble of the Tariff REIT Selloff

America’s new tariff regime is now in place. Importing goods from most of the world will now come at an extra cost. While many of these tariffs may ultimately prove temporary—as world leaders begin negotiating with President Trump to address trade imbalances—the move is already having a significant impact on the future direction of the economy. Despite the possibility of a resolution, traders have been adjusting their positions ever since the tariff amounts were published. The news has pushed nearly the entire global market into negative territory. Real estate stocks have also felt the sting from tariff pressure, though not all sectors or portfolios have been affected equally.

The hardest hit were industrial REITs. The tariffs have raised concerns about a potential slowdown in international trade, leading to decreased demand for warehouse and distribution space. The largest industrial REIT, Prologis, has seen its stock drop about 21 percent. Some industrial REITs have fared better than others. Portfolios with a heavy concentration of coastal properties performed worse than those focused on inland states. Rexford Industrial, which focuses on infill industrial properties in Southern California, was down around 20 percent as well. EastGroup Properties, which specializes in industrial properties primarily in the Sunbelt region, saw a smaller decline of approximately 17 percent.

Higher prices and economic uncertainty have heightened fears of reduced consumer spending and increased costs for retailers, which sent retail REIT prices down as well. Simon Property Group, a major mall owner, declined around 17.1 percent. Other retail sectors held up better. Kimco Realty, with its focus on grocery-anchored shopping centers, dropped only 11.3 percent. Realty Income’s stock declined just 8.6 percent, likely due to its focus on free-standing, single-tenant commercial properties and essential retail.

Even though tariffs don’t affect the cost of housing directly, residential REITs still took a hit. Equity Residential fell roughly 13 percent. Even healthcare has struggled—Welltower declined about 2 percent.

There are still many changes ahead as more tariff news emerges. But so far, the initial reactions suggest that investors are taking a more negative view of industrial and retail REITs due to concerns over trade slowdowns and consumer spending. Despite this outlook, some portfolio strategies have shown more resiliency—at least when it comes to the knee-jerk reaction of the public markets.

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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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