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NEGOTIATING THE FUTURE OF PROPERTY MARKETS

The Trans-Pacific Partnership and Commercial Real Estate

Executive Summary


The Trans-Pacific Partnership—commonly referred to as the TPP—is a large regional trade deal that was negotiated between 12 Pacific Rim countries. Trade agreements are important to real estate markets because they facilitate the exchange of goods and services. In addition, such agreements can potentially alter where goods and services are produced and raise incomes. If ratified, the TPP will significantly impact economies around the Pacific Rim, with corresponding effects in property markets.

In terms of size, countries included in the TPP collectively represent 20% of global trade and 40% of global GDP. In terms of scope, the TPP goes beyond reducing traditional trade barriers and addresses other issues, like unfair competition from state-owned enterprises, customs practices, intellectual property rights, transparency, and labor and environmental standards.

Looking at property types, the clearest winner from the TPP will be industrial and logistics real estate as trade flows increase. Industrial markets in Canada, Japan, Malaysia, Mexico, the U.S. and Vietnam should all experience notable gains. Office markets in the U.S. and Japan will benefit from higher demand for services that are exported or utilized for trade. Retail markets in countries with large income gains—like Malaysia and Vietnam—will see the most notable impacts.

The effects of the TPP will extend far beyond the Pacific Rim. Should the deal be ratified, it will shape future trade negotiations and liberalization, and will influence demand for space across the region’s property markets for quite some time. Long-term investors should take note that the trade ministers from these 12 countries—in quite a literal sense—have negotiated not just a trade deal, but also changes in property markets.

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The TPP and Commercial Real Estate

For more information about this ViewPoint, please contact:

Richard Barkham, Ph.D.
Chief Economist, Global
+617 912 5215
Darin Mellott, Director of Research and Analysis, Southwest Region
Darin Mellott
Director, Research and Analysis - Southwest Region
+1 801 8698014
+1 801 8698080