CRE News Roundup: Tariff Pressure, Amazon's Warehouse Return, and the Office Conversion Wave

The first week of April brings a familiar mix of macro noise and sector-specific momentum. Tariffs are back in the headlines, Amazon is shopping for warehouses again, and the office-to-housing conversion pipeline is swelling faster than most expected. Here is what moved in CRE this week and what it means for your book.

Tariffs Are Hitting Developers Where It Hurts

Construction costs are rising again, and tariffs are a primary driver. Input prices for nonresidential construction jumped 2.9% year-over-year entering 2026, with materials like steel, aluminum, and copper absorbing most of the impact. In New York City specifically, tariffs have pushed material costs up 8.5% to 9.6%, threatening the feasibility of new housing and mixed-use projects.

Overall construction costs are estimated to rise roughly 8% under current policy, with material-specific impacts ranging from 5% to 25% depending on sourcing. The result: development pipelines are tightening, speculative starts are stalling, and developers are stress-testing every deal under multiple tariff scenarios. For brokers, this is relevant in two ways. Fewer new deliveries means existing inventory holds value longer, and owners sitting on aging but functional assets may have more negotiating leverage than they think. The supply constraint that has held retail and industrial together is getting reinforced by cost pressure on the development side.

Amazon Is Back in the Warehouse Market

After an extended period of subletting excess space, Amazon is actively re-entering the market to acquire warehouse properties. This is a signal worth paying attention to. When the largest e-commerce operator in the world shifts from shedding space to acquiring it, it reflects a genuine recalibration of their demand outlook.

The broader industrial picture supports it. Industrial remains the only CRE sector appreciating above COVID-era pricing levels, with Moody's projecting approximately 3% annual rent growth in 2026, the highest of any commercial property type. Vacancy rates plateaued at 9.3% in Q4 2025 and net absorption rebounded strongly in the second half of the year. Class A distribution centers in primary markets are trading at cap rates between 4.75% and 5.5%, while secondary single-tenant assets sit in the 7% to 8.5% range. The spread is wide, and selectivity is everything. If you are representing industrial tenants or investors, the Amazon re-entry is a tailwind that supports your pricing conversations.

Office-to-Housing Conversions Accelerate

Two separate policy moves this week signal that the office-to-housing conversion wave is picking up institutional support. In California, state policymakers are actively removing barriers to converting older commercial buildings into housing. At the federal level, President Trump's executive order targeting regulatory barriers to affordable housing construction could affect federal funding for cities and states that resist faster permitting and relaxed development rules.

Nationally, 90,300 multifamily units are currently in the conversion pipeline, up sharply from prior years. In Los Angeles, companies are increasingly choosing to buy their downtown office buildings rather than rent them, as office values hit bottom and owner-users now account for nearly half of downtown deals. This bifurcation is the defining story of the office sector: trophy and Class A space is tightening, while legacy stock is getting repriced or repurposed. Brokers with office-heavy books need a clear story for both sides of that split.

Data Centers: The One Sector With No Demand Problem

While most sectors are managing supply and demand carefully, data center leasing activity in 2026 is projected to reach an all-time high. AI infrastructure build-out is driving demand that power grids struggle to keep up with. Supply is constrained not by appetite but by the time it takes to deliver reliable power, and that constraint is not going away soon.

The investment implication is straightforward: assets with power-ready infrastructure and the right grid connections are commanding premiums that would have seemed speculative two years ago. For brokers near major data center corridors, including Northern Virginia, Phoenix, Dallas, and Chicago, understanding power availability and electrical specifications is now a core competency. Tenant and landlord rep work in this niche has become highly specialized, and the brokers building that expertise now will have a durable edge.

Multifamily: Supply Peak Approaching, Patience Required

The multifamily oversupply story has one clear endpoint: the construction pipeline from 2021 to 2022 is working its way through the system, and 43% of investors cite oversupply as their top concern, particularly in Sun Belt markets and the Midwest. National asking rent growth is effectively flat at 0.1% year-over-year, and multifamily asset values have fallen 5% year-over-year in Q1 2026.

The forward case, though, is improving. Permitting is down, new starts have slowed, and household formation remains structurally strong. The Southeast is leading in capital raised, with investors positioning for the upcycle once deliveries thin out. Workforce housing and 1 to 2-star assets are outperforming luxury product right now. For brokers in multifamily, the play is patient: help clients understand where the demand base is stable, and avoid the temptation to underwrite deals on peak assumptions in oversupplied submarkets.

What to Watch Heading Into Q2

The tariff environment remains the biggest wildcard. Construction cost pressure reduces new supply across every sector, which is ultimately a support for existing asset values, but the uncertainty is slowing deal velocity on the development side. The Supreme Court ruling in February limiting executive authority over tariffs added a layer of stability, but a subsequent 10% blanket tariff on all imported goods for 150 days reintroduced noise into the system.

Capital is flowing, lending is improving, and the maturity wall is motivating transactions. Total commercial mortgage originations are forecast to reach $805 billion in 2026, a 27% increase from 2025. Investment activity across CRE is projected to increase 16% to $562 billion this year. The market rewards precision right now: brokers who know their submarkets, understand cost dynamics, and can model deals under uncertainty are the ones closing. If your outreach is still generic, Q2 is the quarter to fix that.