Tariffs—particularly those on semiconductors, steel, and other core imports—have cascading effects across multiple industries. From a commercial real estate perspective, here are the sectors likely to be impacted most:
1. Industrial & Manufacturing Facilities
- Why: Tariffs on semiconductors and related components incentivize domestic production to avoid higher import costs. That translates into demand for advanced manufacturing plants, clean rooms, and supporting supplier facilities.
- Impact:
- Surge in build-to-suit industrial projects for chipmakers, EV battery manufacturers, and aerospace suppliers.
- Logistics hubs located near major highways and airports become vital for handling raw materials and distribution.
- Supply chain partners (tooling, packaging, testing firms) will need specialized space close to anchor facilities like TSMC in Arizona.
2. Logistics & Warehousing
- Why: Higher tariffs on imports push companies to reconfigure supply chains for U.S.-based sourcing. Inventory “just-in-time” strategies shift toward “just-in-case,” meaning more storage.
- Impact:
- Increase demand for Nearshoring in Mexico
- Growth in regional warehousing and cold storage for companies hedging against import delays.
- Increased demand for last-mile distribution facilities to shorten delivery times as imported goods become more expensive.
3. Office & R&D Campuses
- Why: Semiconductor fabs and advanced manufacturers require not just factories, but also large engineering, design, and research offices. Tariffs accelerate the onshoring of R&D alongside production.
- Impact:
- Demand for high-spec office and lab space in markets like Phoenix, Scottsdale, and Chandler.
- Increased clustering around universities and innovation districts, like Tempe and Phoenix, as firms expand engineering teams domestically.
4. Data Centers
- Why: Chips power cloud infrastructure, AI, and digital services. Tariffs that slow semiconductor imports may create near-term delays in equipment availability. In the long term, domestic production capacity enhances stability.
- Impact:
- Short-term supply constraints on servers and electrical equipment are delaying data center expansions.
- High demand for power and water is also narrowing the field of potential sites.
- Longer-term surge in U.S. demand for purpose-built hyperscale campuses, especially near affordable power sources.
Key Insight for Arizona’s Commercial Real Estate Industry
Given Arizona’s unique positioning—with TSMC’s $165B investment and a growing EV/battery ecosystem—the industrial, R&D, and supporting office sectors will see the most significant direct upside if tariffs push more production onshore.
Over the next 12-24 months, the Phoenix commercial real estate industry is likely to see a significant boom in office and industrial property demand.
Commercial Real Estate FAQs
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Which CRE sectors are most directly impacted by tariffs?
Tariffs will impact the semiconductor, industrial, manufacturing, aerospace, logistics, and data center industries the most. -
How do tariffs influence office and R&D space demand?
Tariffs will accelerate the onshoring of research, engineering, and manufacturing. This creates stronger demand for high-spec office and lab campuses in markets like Phoenix. -
What is a last-mile distribution center?
A last-mile distribution center supports the final step in the delivery process where goods are transported from a warehouse or distribution center to the end customer, typically emphasizing speed, efficiency, and cost-effectiveness in reaching the consumer's doorstep. Last-mile facilities are usually located in urban or suburban areas—for example, in residentially dense parts of Greater Phoenix such as Chandler, Tempe, Mesa, Peoria, Arcadia, Tolleson, and Deer Valley.
