In their latest blog post, Principal Asset Management offers a deep dive into the future of private commercial real estate (CRE) in the face of new U.S. import tariffs. Rich Hill, Global Head of Real Estate Research & Strategy, breaks down how a lack of historical precedent makes this moment particularly complex for investors.
Despite a 20% drop in valuations since 2022, the article points to three stabilizing factors: a sharp slowdown in new supply, still-positive net operating income growth, and healthier CRE balance sheets than in previous crises.
Principal AM outlines three scenarios for 2025: a base case where income offsets capital declines, a bearish outlook with further -10% drops, and a bullish view driven by easing macro pressures and resilient fundamentals.
While not immune to volatility, CRE may remain a relative haven in uncertain times—especially in less cyclical sectors like data centers, single-family rentals, and seniors housing.
This is essential reading for anyone navigating private market exposure in the current environment.