On-and-off tariffs and other countries' responses have produced a range of effects on commercial real estate, influencing everything from construction costs and interest rates to insurance premiums. Now, Trepp analysts suggest that credit spreads should be added to that list.
According to the Trepp product management analysts Jamie Quach and Valerie Mondschein, a historical pattern of widening credit spreads during periods of uncertainty—such as during the Covid-19 pandemic—has surfaced again in recent market indicators. Their analysis draws a parallel between the trajectory of CRE credit spreads during the pandemic and the current, evolving landscape of tariffs.
During the pandemic, credit spreads for CRE peaked in late March 2020, following a rapid four-week surge. Starting in late February, retail and multifamily property spreads increased by an average of 40 basis points per week. By March 27, 2020, multifamily spreads had climbed to 315.6 basis points, while office spreads reached 328.6 basis points. Retail spreads peaked a week later at 333.5 basis points.
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In comparing these events to the disruptions of 2025, Quach and Mondschein note that it is still early, but initial sentiment surveys and data indicate that lenders are beginning to tighten credit once again. Trepp’s data, covering the period from March 21 to April 11, 2025, shows that spreads have increased across all major CRE property types: multifamily spreads rose from 150.2 to 159.3 basis points, industrial from 152.8 to 161.9, retail from 165.4 to 177, and office from 203.8 to 213.8 basis points.
Lender responses have varied, with some increasing spreads by as little as five basis points and others by as much as 35, signaling the early stages of a repricing cycle as finance providers adjust to renewed economic pressures and geopolitical tensions.
The outlook remains uncertain. Major companies such as Target and Shein have reported that tariffs are forcing them to pass on higher costs to consumers, while Europe has threatened further retaliatory tariffs if trade negotiations fail. These developments add additional pressure to an already volatile environment. If negotiations lead to more predictable and moderate changes in trade policy, some of these pressures could subside. Otherwise, the cost of imports critical to the U.S. could rise, fueling inflation and potentially prompting the Federal Reserve to reverse course and raise interest rates in response.
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