What is the story about?
What's Happening?
Cushman & Wakefield's latest analysis reveals that shifting U.S. trade policies are increasing costs in the commercial real estate construction sector. Tariffs on imported building materials are expected to raise construction materials costs by an average of 9% in 2025, leading to a 4.6% increase in total project costs. Metals such as steel, aluminum, and copper are facing the steepest cost increases due to tariffs, impacting projects like data centers that require large amounts of copper.
Why It's Important?
The increase in construction costs due to tariffs poses significant challenges for developers, contractors, and occupiers in the commercial real estate sector. As materials costs rise, project budgets are strained, potentially delaying or altering construction plans. This could impact the availability and affordability of commercial spaces, affecting businesses and economic growth. The reliance on imported materials highlights the need for domestic production capacity to mitigate future cost fluctuations.
What's Next?
Stakeholders in the construction industry may need to explore alternative sourcing strategies or invest in domestic production capabilities to reduce dependency on imports. The ongoing trade policy shifts could lead to further volatility in construction costs, prompting developers to reassess project feasibility and timelines. Collaboration between industry players and policymakers may be necessary to address these challenges and support the sector's resilience.
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