Powering the Future: Energy, Trade, and Climate Risks in Global Real Estate

The global real estate market is undergoing a fundamental transformation to asset performance and investment strategy, driven by three major forces: trade instability, energy price volatility, and climate-driven energy risk.

US trade instability and supply chain disruption are adding volatility. Meanwhile, energy security and pricing are prompting investors to reassess their established assumptions. Across the US and beyond, grid instability—driven by aging infrastructure and slow permitting—is slowing modernization.[i] As a result, energy-resilient and self-sufficient properties are becoming increasingly attractive. The rollback of US clean energy incentives, including provisions of the Inflation Reduction Act, has added further uncertainty to renewable infrastructure investment—directly impacting asset performance. Rising geopolitical tension across North America, Asia, and the Middle East has only compounded the pressure.

Climate-driven energy risks are intensifying the urgency for adaptation. Extreme weather events—heat waves, wildfires, hurricanes—are straining energy grids and physical infrastructure alike.[ii] High-risk properties face blackouts, rising insurance premiums, and physical damage, while tightening carbon regulations in the EU, Canada, and California are making fossil-fuel-reliant buildings obsolete. Capital is now pivoting toward net-zero and climate-resilient developments that offer stable, lower-risk returns.

WHY THIS MATTERS FOR REAL ESTATE INVESTORS

The connection between trade, energy, and real estate has never been more consequential. Yet many institutional investors remain underprepared for the complexity and scale of long-term risks emerging from this convergence. Geopolitical instability and climate disruptions are reshaping costs, underwriting, and capital flows.

Nowhere is this more evident than in the unraveling of the US–Canada energy partnership. Once a symbol of cross-border stability, it is now a source of policy friction and volatility, with flows of energy and building materials disrupted. Canada is emerging as a pivotal player in the rare earth minerals sector, but China’s dominance in processing poses risks for developers reliant on solar, batteries, and smart building systems.[iii] Additionally, the Middle East’s pricing power through OPEC+ continues to pressure energy-dependent markets amid rapid decarbonization, affecting real estate operating costs across regions.

Portfolio strategies must now account for more than location and asset type. They must integrate supply chain resilience, geopolitics, and long-term energy access.

This article examines how these forces are shaping commercial real estate. Drawing on global case studies, it explores the impact of energy security and climate risk on valuation and underwriting and outlines how real estate and energy sector leaders can collaborate to build more resilient, investable markets.

Real estate is at an inflection point. Those prepared to adapt will lead. Those who delay will fall behind.

A RELATIONSHIP UNDER STRAIN: US-CANADA TRADE IN TRANSITION

For decades, the US–Canada trade partnership has underpinned North American economic stability—especially in energy and critical materials. Canada supplies about 60% of US crude oil imports, 99% of its natural gas imports, and around 90% of its electricity imports, much of it vital to the Northeast and Midwest.[iv] Canada is also a key source of critical minerals—including nickel, cobalt, graphite, and magnesium—essential to battery storage, electric vehicles, and energy-efficient building technologies.[v]

But this stability is now under strain. Since President Trump’s re-election in 2024, escalating trade disputes have disrupted long-standing bilateral norms. New tariffs, tighter regulations, and the politicization of cross-border infrastructure are undermining a cornerstone of global trade. For real estate, these disruptions are reshaping development, operations, and long-term performance.

THE 2025 US-CANADA TRADE WAR: STRUCTURAL SHIFTS IN ENERGY AND REAL ESTATE

Since early 2025, a series of tariffs and countermeasures—including new US universal import duties and vehicle tariffs— have upended the US–Canada energy and materials trade (Exhibit 1).[vi] In February, the US imposed sweeping tariffs on Canadian imports. While oil and natural gas were exempt, key construction and energy-transition materials—including steel, aluminum, lumber, and rare earth minerals—were not. These measures have sharply raised project costs and delayed clean energy infrastructure.

Canada retaliated with tariffs on US materials and a 25% surcharge on electricity exports to states like New York and Vermont, adding stress to already fragile regional grids (Exhibit 2).[vii] As of April 9, Canada also imposed a 25% tariff on US-made vehicles and initiated a formal World Trade Organization dispute over US duties.[viii] For real estate operators, this has meant cost instability and energy uncertainty.

In response, the US has reopened federal lands for oil and gas exploration, reauthorized pipeline projects such as Keystone XL, and accelerated investments in nuclear and gas capacity. These efforts aim to boost domestic independence, particularly in energy-producing states—but also introduce risk for markets still reliant on Canadian inputs.

On the mineral front, the US invoked the Defense Production Act to accelerate domestic mining. Projects in Nevada, Arizona, and Montana are now federally supported, while the Pentagon is backing a “mine-to-magnet” initiative to rebuild a domestic supply chain.  Scaling these operations is a gradual process, and the interim risks must be carefully managed. Material supply issues continue, causing delays and pricing fluctuations on batteries, EV infrastructure, and sustainable materials.

Canada is pursuing diversification as well. With US demand becoming less reliable, Canadian officials are fast-tracking energy partnerships with Asia and Europe. LNG Canada is expected to begin exports to Asia by year-end, and the Trans Mountain pipeline expansion will serve Pacific markets. Québec and Ontario are exploring electricity exports to European utilities.

Central to this shift is the rare earth mineral supply chain. These inputs are essential to clean energy, yet fractured US–Canada coordination threatens North America’s ability to compete. Clean infrastructure project costs have risen 12–17% due to disrupted access to materials.[ix] Meanwhile, growing exposure to China—responsible for over 70% of processing—compounds supply risk.

For real estate investors, the implications are immediate: higher development costs, slower progress on net-zero goals, and more volatile energy pricing. Slower cross-border investment is raising risk of regional dislocation.

The way forward demands adaptation. Markets responded sharply, with major indices dipping in April on fears of prolonged supply chain instability and rising costs.[x] Developers and investors must diversify sourcing, monitor emerging mineral processing hubs, and build flexibility into timelines and procurement. These strategies require active collaboration between energy providers, material producers, and real estate developers—shared solutions to shared vulnerabilities. Above all, real estate and energy leaders must advocate for renewed US–Canada cooperation on infrastructure and permitting. Without it, unpredictability will persist—even as domestic capacity expands.

THE BIGGER PICTURE: GLOBAL TRADE DISRUPTIONS AND THE ENERGY-REAL ESTATE NEXUS

While US–Canada tensions dominate headlines, they reflect a broader shift: the fragmentation of global energy trade and the rising impact of geopolitical risk on real estate.

China remains the world’s dominant supplier and processor of rare earth minerals. It also leads in solar panels, batteries, and EV components—technologies core to energy-efficient real estate. In early 2025, China’s restrictions on the export of gallium, germanium, and antimony triggered immediate cost increases and supply delays across sectors, including sustainable real estate. These export controls underscore a deeper structural risk: reliance on a single supplier for inputs critical to the energy transition.

In response, North America is accelerating efforts to build domestic capacity—but permitting and regulatory timelines remain long. Australia, Latin America, and Southeast Asia may offer alternatives, but the road to redundancy is complex.

Meanwhile, the Middle East remains a dual-force actor—both as a source of price-setting fossil fuels and as an emerging hub for green infrastructure investment. In April 2025, OPEC+ shocked markets by announcing a production hike that sent Brent crude prices tumbling.[xi] The move reminded investors that oil pricing is still highly political—and real estate portfolios must hedge accordingly.

At the same time, sovereign-backed mega-projects like Saudi Arabia’s NEOM and the UAE’s Masdar City are pioneering new urban design models rooted in clean energy. These cities exemplify genuine progress in scalable net-zero infrastructure, rather than merely serving as public relations showcases. Qatar is also expanding its portfolio of LEED-certified and mixed-use sustainable developments.

Crucially, Gulf sovereign wealth funds are deploying increasing capital into global energy-efficient real estate.[xii] Their investments point to a shift in priorities, offering a model for energy-real estate collaboration around resilient development.

NAVIGATING THE NEW ENERGY-TRADE ORDER: STRATEGIES FOR RESILIENT REAL ESTATE

In today’s global environment, institutional real estate investors face a new strategic reality. Energy instability, fractured trade relationships, and climate-driven shocks are no longer temporary—they are structural. The once-clear lines between energy markets, infrastructure, and asset performance have disappeared. Success now depends as much on geopolitics and supply chain strategy as on local market fundamentals.

Mitigating supply chain vulnerability—particularly in clean energy technologies—has become a top priority. China still dominates mineral extraction, battery components, and solar manufacturing, creating material delivery risk for real estate reliant on energy-efficiency technologies. Leading investors are shifting upstream exposure to North America and Australia, while building trade partnerships across Southeast Asia and Latin America to diversify away from concentrated sourcing.

At the asset level, energy-resilient properties are emerging as foundational to future portfolio strategies. Buildings equipped with microgrids, on-site renewables, and battery storage stabilize costs and ensure continuity amid price swings and grid stress. As carbon regulations tighten, investors increasingly favor developments with low emissions, local energy generation, and embedded flexibility.

Globally, capital flows are tracking this shift. The Middle East, long a symbol of fossil fuel dominance, is now positioning itself as a global hub for energy-smart urbanism, demonstrating scalable net-zero design backed by sovereign capital and long-term vision. This signals a lasting shift toward low-carbon development and resilience.

Across markets, the most resilient real estate strategies are grounded in geopolitical awareness, materials flexibility, and infrastructure adaptability. Permitting, regulatory friction, and price volatility are now baseline conditions. High-performing firms are updating underwriting models to reflect this reality, extending timelines, and stress-testing procurement assumptions. The opportunity is to reduce shared risks and pursue common goals. Real estate and energy sectors must now co-design the systems, materials, and regulatory pathways that shape urban sustainability.

The future is not about restoring stability—it’s about building for controlled volatility. Investors who anticipate geopolitical risk, align capital with the shifting trade and energy landscape, and deploy into resilient assets will be best positioned to lead. Energy-smart real estate is now the global standard. Those who move first will hedge risk—and own the next era of value creation.

SUMMIT #18

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Note from the Publisher

Gunnar Branson | AFIRE

Sector Intersection: Exploring the Convergence of Energy and Commercial Real Estate

Benjamin van Loon | AFIRE

Powering Future Development: The Power and Players Behind Economic and Real Estate Development

Jeff Kanne + Darob Malek-Madani | National Real Estate Advisors

US Solar in 2025: What Matters in the United States for Solar Investors

David Wei | SolarKal

Decentralized Energy: Energy Systems, Decentralization, and the Built Environment

Dr. Michael Ferrari | AlphaGeo

Let’s Be Honest – It’s About NOI

Kevin Berkemeyer | Station A

Targeted Investment: Untangling the Building and the Grid

Elena Alschuler + Marisa Mendenhall + Haya El-Merheby + Brian Klinksiek + Julie Manning | LaSalle Investment Management

Faring On Adoption: How Does US Commercial Real Estate Fare on Green Energy Adoption?

Andrea Savio | Georgetown University

Powering the Future: Energy, Trade, and Climate Risks in Global Real Estate

Tanja Milosevic | Grosvenor

Root Causes: An Honest Addressing of the Climate Crisis

Asaf Rosenheim | Profimex

Grid-Interactive Multifamily: Beyond Efficiency: Multifamily Buildings as Energy Assets

Thomas Stanchak | Stoneweg

Power as a Platform: The Role of Real Estate in the Grid of the Future

Susan Uthayakumar | Prologis

Unlocking Abundance Together: How Real Estate and Energy Stakeholders Can Power Growth and Investment

Derek Kaufman + Joshua Seawell | Inclusive Abundance + Mike Kingsella | Up for Growth

Investing in Tech Adjacencies: Leveraging the National Tech Buildout Beyond Data Centers

Tom Kennedy + Luigi Cerreta | JP Morgan

Navigating the Labyrinth: The US Regulatory Landscape at the Intersection of Nuclear Energy and Data Centers

Amy Roma + Chip Cannon + Porter Wiseman | Hogan Lovells

Transmission Alley: Rural Real Estate, Railways, Renewables, and the Future of Data Infrastructure

Michael Maloff + Gary Goodman | Dentons