By Carol Ryan

Property investors think American consumers will prioritize paying the rent and their cell-phone bills in a trade war. All bets are off for other non-essential spending.

That is leading to a classic recession trade within real-estate stocks. Shares of the most economically sensitive property companies are cratering, especially those that are heavily exposed to discretionary spending.

Prologis, America's biggest e-commerce warehouse REIT, is down 14% since President Trump unveiled his reciprocal tariffs.

Mall stocks are down the same amount over worries that a slowing economy will hammer retailers. Even mall landlords that have deep-pocketed luxury tenants, such as Simon Property Group, have been hit. A falling stock market will make the wealthy consumers that spend on luxury goods feel poorer.

Housing stocks are holding up. American Homes 4 Rent and Invitation Homes have slipped 3%, significantly outperforming the S&P 500's slide. "People have to keep a roof over their head," says Cedrik Lachance, director of research at real estate analytics firm Green Street. "Multifamily apartments, single-family and manufactured home stocks should be okay."

Most eye-catching are cell-tower owners American Tower Corporation and SBA Communications. Both stocks have gained 5% over the past two days.

That's partly tied to expectations that the Federal Reserve will have to cut interest rates to prop up the U.S. economy. But it's also a bet on the hierarchy of needs of modern consumers: people strive to pay their cell-phone bill no matter how bad things get.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

(END) Dow Jones Newswires

April 04, 2025 11:20 ET (15:20 GMT)

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