Impact of Potential Tariff and Immigration Policies on Construction Costs
by King White, on Jan 9, 2025 7:00:00 AM
As we head into 2025, the U.S. construction industry faces significant uncertainties that could influence corporate real estate decisions and capital-intensive site selection projects. Key among these are the implications of President-elect Donald Trump’s positions on tariffs and immigration, which are poised to negatively affect both the cost of construction materials and the availability of labor.
Economic policies and their impact
The introduction of potential tariffs and changes in immigration policy could lead to increased costs for construction materials and a tighter labor market. Such changes would directly impact the cost dynamics of building new facilities and could lead to delays or increased expenses for companies looking to expand or relocate.
The role of economic incentives
In this uncertain landscape, state and local economic incentives such as cash grants, infrastructure grants, tax credits and tax abatements become crucial. These incentives can help offset the rising costs associated with new construction and site developments, making them pivotal in the decision-making processes of companies planning to relocate or expand their operations.
Current construction market trends
According to recent data, total construction starts have seen a decline, although there are signs of growth in residential and nonresidential sectors year-to-date. This mixed picture underscores the need for companies to carefully consider how economic conditions influenced by government policies could affect their long-term real estate and construction strategies.
Strategic considerations for companies
Companies must stay agile, leveraging economic incentives to mitigate risks associated with new capital projects. Engaging in thorough pre-development activities and securing advantageous financial terms will be key to navigating the increased costs and potential delays in the construction pipeline.
Conclusion
As the landscape of U.S. economic policies evolves, so too does the terrain for corporate real estate and construction. By understanding these shifts and making strategic use of economic incentives, businesses can protect themselves against uncertainty and align their site selection strategies with their long-term growth objectives.
