Construction Braces For Impacts Of Tariffs, Deportations

Local experts suggest that trade tariffs and immigration policies could significantly affect the construction industry.

Trade tariffs may lead to inflation and recession, as seen in the past, with profound effects on the construction sector, impacting both costs and demand.

Lisa Colon, a partner at Saul Ewing, explained, “Tariffs on materials imported from Canada and Mexico could disrupt supply chains, further increasing material costs, which are already high due to factors like natural disasters. This will make construction projects more expensive.”

Immigration policies that induce fear among workers could worsen the ongoing labor shortages in construction, making it harder to recruit and retain skilled labor, Colon added.

To mitigate the impact of supply chain disruptions and material shortages, contractors can build relationships with multiple suppliers for critical materials, reducing reliance on a single source

Colon suggested, “This provides more options if one supplier faces delays or shortages. Maintaining higher inventory levels of commonly used materials as a buffer against supply chain issues.”

Cushman & Wakefield’s fourth-quarter 2024 market report revealed a slight dip in the commercial real estate development pipeline, with just under 1 million square feet under construction, 75% of which is already leased. The report noted that new online products won’t significantly ease the limited retail space in the market.

The report also mentioned that net absorption for the year exceeded 1 million square feet, driven by strong quarterly performances at both the start and end of the year, accounting for 87% of the absorbed space. While deal activity is expected to rise in the second half of 2025, growth may remain slow due to space constraints. Although annual average rate growth has slowed, asking rents for premium locations continue to rise, ranging from $250 to $500 per square foot in the Design District, $150 to $200 on Lincoln Road in Miami Beach, and $100 to $200 in Brickell and Coconut Grove.

Colon suggested that contractors consider adopting a just-in-time (JIT) delivery model, which reduces inventory carrying costs and minimizes the risk of material obsolescence. She also emphasized the importance of investing in technology and automation, leveraging tools like BIM, prefabrication, and robotics to enhance efficiency and reduce labor costs. Finally, Colon urged construction professionals to advocate for policy changes.

“Work with industry groups to influence government decisions on trade, immigration, and policies that impact construction,” Colon said. “Building agility and resilience across all areas of the business is key to adapting quickly to the unpredictable nature of the construction industry.”

Source: Miami Today News