TAG Industrial Watch: May 24, 2025

One week prior to Liberation Day on April 2nd, TAG brought attention to the “eye of the storm” that settled over the bond market and issued a warning that the decline and stability of interest rates would not last for long. While interest rates on the closely tracked 10-year Treasury note would experience the biggest weekly increase in four decades following Trump’s tariffs announcement, rates have continued to climb higher for the very reason TAG warned about. This past week, tariffs took the back seat as the focus turned toward the president’s “Big, Beautiful Bill” working its way through Congress. President Trump’s new spending and tax bill rattled the bond market thanks to new tax cuts and increased spending that will add an estimated $5.2 trillion to the national debt, including an extra $600 billion to the already forecasted $2 trillion budget deficit next fiscal year (BBC, CBO). The expectation of bigger deficits than expected sent the 10-Year Treasury to 4.6%. Perhaps more importantly, the 30-year Treasury (which represents investors’ long-term faith in the value of the U.S. dollar) shot above 5.0% for only the second time since 2007.

Since price inflation broke out in 2021, TAG has contended that “Trillion-dollar budget deficits financed by the Fed’s printing press is the driving force behind the price increases” (Industrial Watch Magazine, Mid-Year 2021). However, bigger budget deficits don’t just spell more inflation and higher interest rates, but lower industrial property values. With industrial rent growth decelerating toward negative territory and 7.3% market cap rates contending with 6.9% industrial mortgage rates, historically high property values probably won’t last much longer (CoStar, Select Commercial Funding). Whether you’re an investor or owner-user, this may be the last opportunity to take advantage of record-high equity levels before rising interest rates discourage too many buyers from the bargaining table.

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I N D U S T R I A L   N E W S

US House Passes Trump’s ‘Big, Beautiful’ Tax And Spending Bill
BBC – May 22, 2025
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Stocks Close Little Changed After Moody’s Downgrades US Debt
ABC News – May 19, 2025
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UK Overtakes China As Second-Largest US Treasury Holder
Financial Times – May 17, 2025
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Loan Modifications Nearly Double To $39B As Extend
And Pretend Tactics Surge
GlobeSt.com – April 22, 2025
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Abandoned Industrial Sites Could Get A Second Chance
As Manufacturing Demand Switches Industries
Bisnow – May 6, 2025
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R E G I O N A L   N E W S

Trammell Crow Adding To DFW Industrial Park
Connect CRE – May 12, 2025
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Clear Height Properties, Long Wharf Capital Acquires
37,254-Square-Foot Industrial Property In Broadview
REjournals – May 20, 2025
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Pearlmark, Falcon Commercial To Develop 321,193 SF Industrial
Project In Saginaw, Texas
REBusiness – April 24, 2025
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How The Revitalization Of State Highway 35 Is Breathing New Life
Into Pearland’s Old Town
Bisnow – May 16, 2025
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One Of Nation’s Biggest Speculative Industrial Projects Gets
Underway In Dallas-Fort Worth
CoStar – May 15, 2025
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