From container slowdown to CRE’s cautious rebound, the industry’s holding on as tariffs bite, labor softens, and the market tries to stay in tune…RIP Ozzy.
The markets got a taste of diplomacy this week and for a minute, it almost felt like the noise was dying down. New trade deals rolled in from Japan, Europe, and Southeast Asia, calming some of the tariff-fueled feedback that’s been rattling global supply chains and commercial real estate underwriting desks since spring. But if anyone thought we were stepping off the crazy train, think again. The underlying data from collapsing container volumes to cautious capital flows still sounds more like distortion than harmony. And fittingly, in a week when we said goodbye to Ozzy Osbourne, the godfather of glorious chaos, the CRE market is doing what he always did best: forging ahead through the noise, riding the rails even when the track feels uncertain.
Diplomatic Wins are a Trade Truce but Not a Peace Treaty
Let’s start with the good news. The U.S.–Japan agreement, announced Monday, slashed tariffs on autos, semiconductors, and industrial components from roughly 25% to 15%. Japan, in turn, committed more than $500 billion in U.S. investment for liquefied natural gas (LNG) facilities, Boeing aircraft, and other long-term bets that will get capital markets talking.
Talks with the EU also reached resolution over the weekend, with both sides aligning on a 15% ceiling for key goods, aiming to avert another transatlantic flare-up. Add in new agreements with Indonesia and the Philippines, and the administration’s tariff diplomacy is clearly pivoting toward containment rather than confrontation.
But these are policy pauses, not full reversals. The August 1 tariff hike deadline for imports from China and Mexico still looms, and until it’s cleared, the damage already done, especially in shipping, isn’t going away.
Container Volumes Plunge: The First Shoe to Drop
The numbers out of U.S. ports are brutal. June container volumes dropped to 1.57 million TEUs (twenty-foot equivalent unit), down nearly 27% year over year, the sharpest monthly decline since the COVID-era shock. May volumes came in at 1.66 million TEUs, off more than 20% from last year.
This wasn’t just a seasonal dip. Earlier projections for May hovered around 2.1 million units. Instead, we got a cold slap of tariff reality. Importers front-loaded in April to beat policy changes and then hit the brakes.
Looking ahead? July and August forecasts hover in the 1.7 million TEU range, down roughly 25% year-over-year. It’s a clear signal that supply chains are pulling back. The once-reliable rhythm of “order, ship, restock” has been replaced by hesitancy, higher costs, and logistical whiplash.
For CRE, this hits especially hard across industrial and port-adjacent markets. Leasing activity in logistics hubs has softened, not collapsed, but underwriting is changing. The tenant that would’ve signed in May is now “waiting to see what happens in August.”
CRE Activity Rebounds but Mind the Context
Amid this turmoil, LightBox’s CRE Activity Index showed a promising rebound in June, rising to 113.9, up from 105.5 in May and marking the strongest level since mid-2022. That’s a 21% year-over-year gain and an 8% month-over-month jump.
It’s an encouraging signal: more property listings, more lender appraisals, more environmental diligence activity. But let’s not confuse activity with momentum. A lot of this bounce reflects deals that were delayed earlier in the quarter, not a sudden return to full-throttle expansion. Asked about how their near-term outlook changed since early 2025, responses to the LightBox CRE Market Sentiment Survey showed that sentiment across the industry is highly fragmented. Just over one-third (34.8%) of CRE professionals are more pessimistic than back in January while 33.3% are more optimistic. Another 31.9% indicated no change in outlook, suggesting that cautious wait-and-see attitudes persist.
What we’re seeing in the data is a market trying to digest the shock of tariffs and find its footing. Institutional capital is still moving, especially on larger, mid-cap deals. But in the small-to-midsize space, caution is the operating word. Sponsors are sharpening pencils. Lenders are asking harder questions. Everyone’s scouring news sources for the next policy headline.
GM’s $5 Billion Warning
If you want a corporate snapshot of what tariffs are doing to margins, look no further than General Motors. The automaker took a $1.1 billion hit in Q2 directly related to tariff costs. Their full-year estimate? Up to $5 billion.
So far, they’ve resisted pushing those costs onto consumers. But the longer these tariffs linger, the more inevitable price hikes become. And while GM is pushing forward with plans to retool U.S. plants, those investments won’t deliver until 2026–27. In the meantime, suppliers are sweating, capital budgets are tightening, and planned expansions tied to manufacturing growth are being reevaluated.
Retail Sales Rose but More Uncertainty to Come
Yes, retail got a surprise win in June: sales rose 0.6%, with strength in auto, clothing, and e-commerce categories. But after a sharp drop in May, this feels more like a technical bounce than a behavioral shift.
The real story is in the backdrop. Retailers spent the spring front-loading inventories to dodge tariffs. That gave them some cushion but not clarity. And with container volumes down double digits, fewer goods are flowing in to restock shelves.
Retail tenants aren’t panicking but those that serve price-sensitive consumers are recalibrating. As they consider alternate sourcing plans, they are also resizing expansion plans. New location approvals may take longer. And rent negotiations? Those may be back on the table in Class B assets.
Labor Softens: The Other Side of the Squeeze
If tariffs are hitting supply chains, then labor starts to tug at the demand side. And it’s the data point that Rebecca Rockey, chief economist at Cushman and Wakefield, said she’s watching closely.
In last week’s CRE Weekly Digest, Rockey noted “The labor market is king, and so I’m watching what’s happening to the diffusion of job growth and what businesses are saying about their intentions around labor in surveys because ultimately consumers drive our economy, and they don’t spend if they don’t have a job.”
Weekly jobless claims are inching up. Wage growth has cooled. Layoffs, once confined to tech, are creeping into logistics, retail, and yes even parts of finance. This isn’t a labor collapse. But it’s a meaningful deceleration. And now, all eyes are on the July jobs report due out Friday, which will likely dictate the next movement in both rate policy and consumer confidence. A soft print would validate the slowdown thesis. A surprise gain could inject just enough energy to push CRE tenants off the sidelines.
And if consumers start to feel more fragile, CRE demand may shift fast. That impacts retail first, industrial second. The open question is whether the softness deepens, or just settles into a slower, more cautious pace.
Final Thoughts from the LightBox Desk
The CRE market today feels like a moment between riffs: activity is building, but there’s distortion in the background. We’ve got positive signals that deal flow is up and trade tension is stabilizing but the feedback loop is still unstable.
And maybe that’s fitting right now because as we bid farewell to the Iron Man, we can appreciate that he made a career out of marching right into the distortion, embracing the madness, and somehow making it work.
That’s not a bad metaphor for CRE right now. Deals are getting done but they’re louder, riskier, more improvised. Capital wants clarity, but the volume is up and the lyrics are unclear. If you’re navigating this space, you need instinct, grit, and a lot of conviction to make sure you don’t go off the rails.
So, here’s to Ozzy…And here’s to the brokers, developers, and lenders who, like the man himself, somehow thrived amid the noise.
Until next time,
The LightBox Team
