Many businesses are taking a wait-and-see attitude to the federal government’s ongoing and evolving efforts to impose tariffs on foreign goods and reduce federal government spending.

But “wait-and-see” does not mean doing nothing, and the experts at tax advisory firm Ryan say commercial real estate owners and occupiers should prepare now for the potential impacts of these unprecedented government initiatives.

“It is widely anticipated that tariffs on steel, aluminum and lumber will result in higher prices for commodities, higher construction costs and increased pressure on business profits,” said Sandi Prendergast, Ryan director of research for property tax. “The tariffs also contribute to greater economic uncertainty, which can affect consumer and business spending.”

The effects of this uncertainty are already evident among certain asset classes.

In retail, tariffs could lead to rising costs and declining sales, which would put downward pressure on rent and occupancy, Prendergast said. Smaller retailers in vulnerable, fashion-focused mall locations will likely be hardest hit. This could increase store vacancies in a sector still coming to terms with the rapid growth of e-commerce during the pandemic.

Industrial properties are feeling the pain of declining demand, higher costs and supply chain disruptions. Prendergast pointed to reports that leasing for Prologis's warehousing portfolio slowed by 20%. Analyses of year-over-year market changes were already showing increasing vacancies and cap rates in the warehousing sector, she added.

“Assessments for warehousing in most areas have been slow to catch up with rising values — and they are continuing to increase even while values decline,” Prendergast said.

While the shorter-term business impacts of fluctuating tariffs are already felt in rising prices and reduced consumer and business spending, the longer-term impact on taxes is yet to be seen.

However, Corinne Krikstan, a principal and the leader of Ryan’s personal property tax practice, said business owners could feel the effect on personal property taxes as early as 2026.

“Cost is the basis for personal property tax, and as costs of assets increase, so will the property tax,” Krikstan said. “Local depreciation tables and cost index factors are applied to determine the fair market value of assets for property tax assessment — furniture, fixtures, equipment and sometimes inventory — but those tables are rarely updated to address industry or macroeconomic factors, often resulting in overassessment.”

‘Remains To Be Seen’ 

The exact impacts on real property taxes are difficult to predict, as those are determined by a patchwork of taxing jurisdictions at the state and local levels across the country, each following its own methodology and schedule in property reassessment.

“It remains to be seen what impact there might be on commercial real estate assessments in the next assessment cycle,” Krikstan said. “The impact may vary by industry and by business, but property owners should gather evidence now and be prepared to file an appeal if their reassessment does not reflect the impact to their property.”

Adding to the uncertainty are efforts by the Department of Government Efficiency to reduce the size of the federal government, with a particular focus on terminating office leases. What those spending cuts ultimately amount to is unknown, but DOGE’s activity could create waves felt far from Washington, D.C.

“Cutting federal spending can increase the costs borne by or funding provided to state and local governments, leading to higher property tax rates for businesses,” Krikstan said. “It could also impact employment levels at local assessors’ offices, which are typically understaffed as it is, making a slow appeal process even slower.”

Property taxes are among the highest costs that a business has to manage, particularly a CRE business. Pat Broome, a Ryan principal and vice practice leader in personal property tax, noted that it is not easy to predict or budget for a tax that is based on a valuation set by state and local authorities. Their mass appraisal approach often does not account for factors specific to or external to the property itself — but an organization can take steps to protect itself, he said.

Already Thinking About It

“Almost every company I speak with has told me they are cautiously optimistic the tariffs won’t impact their business too much, but they’re also planning for it in the event that it does,” Broome said.

Broome and his Ryan peers said being proactive is the smart approach for businesses in the face of these unprecedented challenges, no matter how optimistic they are. There are many things they can do to mitigate rising taxes, he added.

“At Ryan, we work with our clients to be proactive with how they manage their assessment cycle,” Broome said. “Gathering data early and proactively working with the local assessing authorities is often the best way to ensure you aren’t paying more tax than you should.”

Broome said property owners have much information at their fingertips that would help value their assets. Things like equipment utilization, inventory turnover and product availability may all be affected by potential tariffs and should be considered when valuing property.

“Local assessing authorities will almost never consider these property-specific factors unless they are brought forward by the taxpayer, as they are certainly not considered by their mass appraisal techniques,” he said. “Knowing what data to collect and how to collect it can materially lower one’s tax liability.”

A tax expert can shepherd property owners through this process and help identify opportunities for appeals.

“We can help them navigate the appeal process at the state and local level, identifying which jurisdictions offer the best opportunity for tax relief,” Krikstan said. “In addition, property tax software helps manage compliance and key deadlines, improving their ability to monitor and manage fluctuations in real and personal property tax liabilities for both their overall portfolio and at the site level.”

Ryan uses Tax.com software to manage property and other taxes and to optimize compliance and operational tasks. With the volume and variations of taxes, jurisdictions, rates and deadlines, a national business needs data and software to effectively manage their taxes.

“Our tax experts and tax management software can minimize headaches and maximize results for clients,” Prendergast said. “There may be companies that are taking a wait-and-see approach, but at Ryan, we’re already thinking about and identifying ways that we can assist them.”

This article was produced in collaboration between Ryan and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.