While few South Florida developers are willing to discuss it openly, many anticipate that tariffs on imported materials like steel, aluminum, and lumber will drive up costs and reduce net operating income.
Some developers believe the tariff threats are merely a negotiating tactic, but others have been preparing for months.
“Certain developers and contractors began pre-purchasing and stockpiling materials before the election. Others didn’t think the tariffs would happen,” said Suzanne Amaducci, chair of the real estate and finance practice at Bilzin Sumberg. “What the final tariffs will be, I don’t know.”
In February, homebuilder sentiment hit a five-month low, partly due to concerns about tariffs, rising mortgage rates, and construction costs, according to a National Association of Homebuilders index. Even billionaire hedge fund manager Ken Griffin has publicly addressed the negative impact of Trump’s tariff policies.
The expected increase in deportations is also likely to have a major effect on the construction workforce. Contractors and subcontractors will feel the strain, as they must honor their contract costs with developers. Developers, for their part, are motivated to collaborate with contractors and subcontractors to ensure project completion, even if it means higher expenses.
While contractors must comply with the law regarding hiring practices, Amaducci noted concerns about both employee shortages and rising labor costs.
While South Florida isn’t immune to the effects of Trump’s policies, its real estate market is still outperforming many other major U.S. cities. In some ways, the region is even benefiting from the “Trump bump.”
Amaducci and others expect that interest rates will stabilize, offering greater predictability, which bodes well for commercial real estate and new developments.
Source: The Real Deal
