Tariffs Already Affecting Prices in the CRE Market

 Posted on December 00, 0000 in Commercial Real Estate

There is only one true constant in the commercial real estate market: prices change and fluctuate on a regular basis. Unfortunately, those changes in the market can dramatically affect the success of a project. Consider those who are currently under contract and facing price hikes from the recently imposed tariffs; many are starting to realize that they cannot complete their projects within their proposed budgets, so they may be forced to either abandon their ventures or hope that the losses can be made up elsewhere. However, there are some benefits to the tariffs for existing real estate developers, and those that are facing challenges because of the tariffs can mitigate the issues. Learn more, including how a skilled real estate attorney can help.

Tariffs and New Project Budgets

Cost is a critical factor for real estate developers - and not just because of how it affects their bottom line. Some projects, like low-income housing and other government projects, must be completed within the budget amount. Exceeding one's budget can also place a developer at serious risk for a financial loss because it requires one to pass the costs onto the buyer.

No one really knows yet if demand is strong enough to allow for this, especially since prices have already increased because of skilled labor shortages and price hikes on lumber. In fact, most experts believe there will be a significant slow down in the market because of the recent tariffs and its resulting price increases. Thankfully, a seasoned attorney can help with mitigating at least some of the issues early on in the process, and they can assist with due diligence before a project has started to ensure developers have considered all the potential obstacles that may arise.

Established Projects and the Tariffs - A Possible Positive 

Although developers with new and current projects may face serious challenges, those who have already established and completed projects could actually benefit from the tariffs. Price increases that will undoubtedly occur within the market may allow developers to increase their rental prices, even in less developed areas. If done effectively, this could also pave the way for future projects. At the very least, it could allow a developer to save and wait for the next cycle to start.

Contact Our Naperville Commercial Real Estate Lawyers

Whether you are an established developer needing guidance in today's CRE market or a developer trying to break into the industry, Lindell & Tessitorre, P.C. can help. Our Naperville commercial real estate lawyers have assisted on some of the most prestigious and complex projects in the county. Schedule your personalized consultation by calling our offices at 630-778-3818.

Source:

http://www.nreionline.com/development/tariffs-already-putting-pressure-commercial-construction-pricing