As the military conflict in Iran intensifies, ripples from overseas are beginning to reach U.S. shores, reshaping economic expectations and prompting early reassessments across commercial real estate sectors. Analysts say the impact could emerge first through rising transportation costs as global fuel prices surge—changes that may ultimately influence where companies build, store and ship their products.
Savills Vice President and Head of Industrial Research Mark Russo tells GlobeSt.com that growing supply chain expenses are already top of mind. With fuel prices surging and possibly remaining elevated for the foreseeable future, these costs are expected to factor heavily into site selection decisions.
"Depending on the duration of the conflict, this could impact location decisions, prompting companies to choose warehousing sites closer to consumers and increasing demand for urban logistics," he said.
One potential industry winner could be electric vehicles. The recent phase-out of EV tax credits slowed production, but high fuel costs may spark renewed interest and investment, providing a potential boost to the struggling sector.
Defense-related manufacturing, meanwhile, is poised for continued acceleration. Geopolitical tensions have already fueled growth in aerospace and defense manufacturing jobs. Under the 2025 H.R. 1 "One Big Beautiful Bill Act," defense funding rose by $150 billion and Savills research found that nearly half of last year's new manufacturing job announcements came from aerospace and defense companies. With military action now underway in Iran, Russo said that momentum is "likely to continue, perhaps at an exponential rate."
He pointed to several regions that could benefit from these shifts.
"There is potential upside for energy-driven North American markets like Houston and Calgary that tend to experience economic growth during periods of higher drilling and production," he said.
But concerns are mounting on the capital markets side. Marcus & Millichap reports that the war is spurring caution among investors, with many adopting a wait-and-see approach. Earlier gains fueled by moderating debt costs could be threatened if the conflict drags on, analysts warn. Prolonged instability could exacerbate inflation, unsettle interest rates and stall real estate transactions—undermining the broader recovery.
Trinity Street Capital Partners notes that geopolitical uncertainty is already cooling economic activity. Tenant demand across sectors is softening as office users delay expansions, retailers face weaker consumer spending and multifamily absorption could slow if job growth falters.
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