Hospitality Investing News - Great Plains May 2025

Although the U.S. primarily sources steel and aluminum from Canada and Mexico, China’s role as the world’s largest manufacturer of construction materials likely means that tariffs will disrupt supply chains globally. The existing 25% tariff on steel and aluminum will likely continue to increase expenses for key structural components, while the Chinese tariff impacts electrical fixtures and plumbing materials, straining budgets across real estate projects. The tariffs have already created price volatility, making it more challenging to predict costs and plan budgets for projects. This uncertainty has resulted in more cautious bidding and reduced development plans. Construction delays, which were already a concern due to supply chain disruptions, are likely to worsen, complicating long-term planning and potentially causing developers to delay projects or increase prices. Commercial real estate stakeholders, particularly in the industrial and retail sectors, are preparing for decreased leasing demand as consumer spending declines. Builders may also encounter increased borrowing costs due to rising mortgage rates and difficulties securing materials in a competitive market. In commercial real estate, industrial and retail properties face risks from their sensitivity to consumer spending trends. Large industrial occupiers are likely to delay leasing, while retail developments slow down due to weakening consumer spending. Multifamily, office, and hotel markets see slower growth as secondary effects. As policies and negotiations evolve, much remains to be uncovered about the long-term effects of tariffs on the real estate industry. Adaptable developers can mitigate the impact on their operations by staying abreast of the latest policy changes and creating risk management and resilience strategies