The Trump administration’s on-again off-again tariffs to the world policy has introduced an unprecedented level of uncertainty — for what was looking like a strong period for trade — to the logistics industry and in turn the logistics real estate market in 2025.
As Colliers International in their “2025 Q2 Market Snapshot” framed the situation facing logistics and logistics real estate interests, “Due to uncertain trade policy expectations, some investors perceive industrial [real estate] as the most at-risk asset class. After stabilization and improvement in the quarters prior, sales volume showed signs of pulling back in Q2. Trade flows have been volatile in recent months, with the stockpiling of pre-tariff inventory pulling future demand forward. This shift contributed to a slowdown in port volumes, likely exacerbated by the earlier run-up. Whether this is temporary or indicative of a new norm will go a long way toward determining investor allocations.”
In their June newsletter Prologis expressed the belief that the logistics real estate market in the US is now sitting in a wait-and-see mode, stating, “Short-term economic uncertainty leads companies to be cautious, both in their growth outlook and in their cautiousness in long-term investing and capital expenditure planning. As a result, many companies are waiting as long as possible before signing a new lease, with space needed urgently after execution. As more positive economic growth comes into view, leasing sentiment improves, and growth occurs at a more regular cadence.”
Still the logistics real estate sector has shown some surprising resilience even with the tariff induced freight flow vagaries. For example, Jason Price, Senior Director, Americas Head of Logistics & Industrial Research at Cushman & Wakefield, a global commercial real estate service firm, observed in their Q2 report, “Demand for logistics space remains resilient. Many companies accelerated imports to manage tariff exposure, prioritizing agility and flexibility in their supply chains. This is driving a noticeable uptick in activity beginning in June, as occupiers moved quickly during a window of lighter tariff pressure…Looking forward, market fundamentals are expected to strengthen, with demand gradually improving and supply falling rapidly. For tenants, the next 6 to 12 months may present the best opportunity to secure favorable lease terms.”
The unpredictability of freight flow also has impacts far beyond the ports. Andy Dyer, CEO of AFS Logistics, a 3PL with a strong presence in the LTL side of the trucking business, wrote, “Despite plenty of international travel by world leaders, trade policy remains an unsettled picture, and businesses are opting for a wait-and-see approach and delaying spending decisions.” He commented, “With no catalyst to ignite demand, some carriers are buckling under the pressure of unrelenting low volumes while others are deploying all available mechanisms to capture revenue.”
Ultimately real estate analysts largely agree the investment in logistics real estate is all about the freight flows and that begins with the nation’s container ports, whose traffic has turned on and off like a sink faucet with each White House tariff pronouncement. For investors and tenants alike, the unpredictability of the tariffs and their impact on international trade flows makes it difficult to determine whether this downturn is the beginning of a long-term trend or just a monetary blip of an otherwise strong market.
US Ports and the China Syndrome
Logistics real estate in the US had been booming around the major US ports. The need for supporting facilities for warehousing and other logistics functions coupled with more manufacturing and distribution moving into these port areas lifted real estate values and leasing costs…at least until the tariff announcements shifted the market into neutral.
John D. McCown, a keen observer of container port trends in the US, wrote in his recently released June McCown Report, “The ten largest US ports showed a 7.9% year over year drop in inbound volume in June. This was the second straight month of declines and was above May’s 6.6% decrease. Both of those decreases were sharp reversals from April’s 9.6% gain. Outbound volume in June was down 5.0%, extending on declines of 2.3% in May and 1.3% in April.”
McCown also pointed out that for the 2nd quarter of 2025 inbound volume was down 1.8%, “a major contraction from the 9.6% quarterly gain in 1Q25.” And that that “inbound volume has been in a downward quarterly trend over the last four quarters…” From these declines McCown wrote, “it is now most likely that there will be a decline in overall annual inbound volume in 2025.” He added that this event “will be one of the more striking year-to-year changes in US container volume in the six-decade history of container shipping. I’m only aware of two periods of annual declines - during the financial crisis and the [COVID-19] pandemic - and both proved to be short-lived.”
The impact on US ports of the Trump administrations tariff war with China can’t be understated. Cushman Wakefield in their June report entitled “Port Markets React to Trade Policies” ran a chart of top US container ports based on Country-of-Origin TEUs (twenty-foot equivalent units) in 2024. All of the major US ports, irrespective of coast, named China as the largest Country-of-Origin ranging in percentage from the Port of Los Angeles at 63% to the Port of Miami at 20%. In 2025 the fall off of inbound containers from China has already been noted in many ports, especially on the West Coast.
From a logistics real estate perspective, the question that this rapid fall in inbound TEUs raises is whether this is a long-term trend — a trend that lasts beyond the Trump term — or an aberration. It is difficult to see port volumes, and thus the demand for logistics real estate near to ports, remaining high without volumes from China. Simply put, second tier exporting nations like Vietnam, India and others at this stage aren’t likely to replace the inbound volumes from China. This in turn could change the logistic real estate market in the US as demand falters. It is this long-term possibility that has the port and related industries terrified in 2025.
