The global trade ecosystem is experiencing a significant transformation, with Trump 2.0's tariff policies and recent diplomatic developments significantly changing how corporate real estate (CRE) leaders operate across Asia-Pacific.
According to Knight Frank's Horizon Report, 'From Whiplash to Resilience: Corporate Real Estate in the New World Order', CRE leaders must now rethink location models, leasing structures, and investment plays with agility, while also preparing for multiple scenarios as trade negotiations evolve.
The Horizon Report identifies three "strategic certainties" that are reshaping corporate real estate strategies across the region, even as temporary relief emerges through the recent 90-day tariff reduction:
Unlike the narrower scope of the first trade war, the current regime applies sweeping levies across 57 countries. While the May 12 agreement has temporarily reduced US tariffs on Chinese goods from 145% to 30% for a 90-day negotiation period, with Chinese tariffs on US goods dropping from 125% to 10%, the underlying policy direction remains clear.
Even at reduced levels, these tariffs significantly exceed historical norms.
Despite the temporary tariff reduction, the structural decoupling of the US and Chinese economies continues, not just in trade but also in technology, capital, and talent flows. While the 90-day window may slow the pace of change, blanket tariffs and expanding national security controls continue to reshape supply chains that once bound the world's two largest economies. Strategic sectors such as semiconductors, EVs, and AI are localising rapidly, with Western and Chinese mainland ecosystems moving on increasingly divergent tracks.
Even with the temporary reduction of tariffs on Chinese exports from 145% to 30%, the strategic imperative for supply chain diversification remains. The rest of Asia-Pacific, particularly Southeast Asia and India, retains significant advantages that drive "China+N" strategies, in which multi-country sourcing and flexible production networks are standard operating requirements. Companies recognise that the 90-day window provides planning time but doesn't eliminate the need for structural diversification.
Real estate strategies across Asia-Pacific are responding to prolonged uncertainty by favouring shorter, more flexible leases and customised space solutions:
Indonesia
Office leases have evolved from 5-year norms to 1 to 3 years, driven by the US-China trade war, and hybrid work models. Break clauses and rent-free periods are now standard, as landlords compete on flexibility.
India
While lease durations remain stable, flex space demand tripled between 2017 and 2019. Built-to-suit formats gained traction in office and warehousing, supported by strong occupier confidence in the domestic growth story. India's relative insulation from direct tariff impacts has positioned it as a strategic haven amid continuing trade uncertainty.
Malaysia
Flexible leases emerged largely during the pandemic. Malaysia continues to attract MNCs with cost-efficient, purpose-built facilities, a trend that is expected to continue regardless of how US-China negotiations evolve.
Vietnam
Occupiers have shortened office commitments from 5 to 3 to 4 years. Industrial tenants increasingly seek 3-year leases with expansion and break clauses, USD-denominated rents, fit-out incentives, and more negotiable expansion clauses. The 90-day tariff reduction has introduced elements of strategic patience to some negotiations, but the fundamental shift toward flexibility continues.
In this volatile landscape, CRE strategy must evolve from footprint expansion to operational durability and total-cost performance.
For more insights, please download the latest edition of Knight Frank’s Asia-Pacific Horizon series, Whiplash to Resilience: Corporate Real Estate in the New World Order, report below.