How to be on the right side of Trump tariffs? US industrial real estate is one of the net winners.

Making money is sometimes easier than protecting and growing it after the event. If you are considering where to allocate your capital to achieve strong returns while navigating global market uncertainties, the U.S. industrial real estate sector, in particular, is showing signs of remarkable opportunity, driven by both political and economic factors that have created a massive opportunity for growth. Let's dive in and understand the key drivers of industrial real estate demand, with a focus on the reshoring efforts of the current U.S. administration, and simultaneously, how upcoming changes in interest rates are poised to further accelerate the demand for industrial properties.

The industrial real estate market in the United States continues to be one of the most resilient and attractive sectors for investors. With a vacancy rate of approximately 7.4%, the market remains tightly held, particularly in sub-sectors such as small-bay industrial spaces, where vacancies are often under 5%. While vacancy rates have slightly increased from historic lows, the fundamental market dynamics are overwhelmingly positive. The slow pace of new construction—down by more than 57% compared to previous years—has left supply well below the levels needed to meet growing demand, creating a significant opportunity for investment in existing industrial properties.

But what is driving this sustained demand, and why is now the perfect time to consider industrial real estate?

One of the most influential factors impacting the industrial market today is the U.S. government’s reshoring efforts. Under both the Trump and Biden administrations, reshoring has become a critical policy focus, designed to bring manufacturing back to U.S. soil. The Trump administration's tariff policies have provided an almost irreversible trend to onshore manufacturing. 

For investors, this reshoring trend presents a powerful opportunity. As businesses move production and supply chains closer to home, demand for industrial spaces—such as warehouses, manufacturing facilities, and distribution centers—has surged. Companies that once relied on low-cost overseas manufacturing are increasingly turning to domestic facilities to safeguard their supply chains, a move that is creating long-term demand for industrial real estate across the country.

In addition to strong demand driven by reshoring, another significant factor that will enhance the attractiveness of U.S. industrial real estate for investors is the anticipated Fed rate cuts. The Federal Reserve is expected to reduce interest rates starting in September 2025, likely by 50 to 100 basis points. Lower interest rates typically lead to a decrease in the cost of capital. 

As interest rates fall, cap rates—the rate of return on investment properties—tend to compress. For investors, this compression means that the value of industrial properties increases. When financing costs decrease, the ability to acquire properties with favorable terms becomes more accessible, and as cap rates compress, property values rise. This creates a powerful cycle of growth in the industrial real estate market, where asset prices increase and investors see higher returns on their investments.

For overseas investors, this is an ideal moment to capitalize on the lower interest rate environment. By entering the market now, while interest rates are still relatively high, you position yourself to benefit from the anticipated rate cuts and the resulting appreciation in property values. This is an excellent opportunity to secure industrial assets before the market fully adjusts to lower borrowing costs, which is expected to happen over the next 12-18 months.

The combination of reshoring efforts, supply constraints, and the anticipated rate cuts makes now a particularly compelling time to invest in U.S. industrial real estate. While vacancy rates have increased slightly, the market remains highly competitive, with limited new supply coming online. The reshoring trend will continue to fuel demand for industrial spaces, and as the supply-demand imbalance persists, rental rates and property values are likely to rise.

With reshoring driving strong demand for U.S. industrial real estate and interest rates expected to decrease in the near future, this sector represents an incredible opportunity for investors. By capitalizing on these factors, you can secure a position in a market that is set for long-term growth and appreciate the value of your investment as rates fall and demand continues to rise.

Whether you're looking to invest in warehouses, distribution centers, or manufacturing facilities, the U.S. industrial real estate market offers a compelling proposition. The policies of the Trump administration have created a favorable environment for reshoring, and with the Fed's rate cuts on the horizon, the timing could not be better.

For more information on how you can get involved in U.S. industrial real estate, join our free webinar, visit Accretiv Industrial Portfolio Limited, or head over to OrbVest.com to learn more about this exciting opportunity. OrbVest SA (Pty) Ltd is an authorized financial services provider.