"What represents a larger threat to the current commercial real estate growth cycle in Florida: A labor shortage of government-imposed tariffs?"
“Looking short term, I’d say the more immediate impact would be the labor shortage, and part of that stems from the last recession, and as a result, folks today have cautious optimism, they’re more hesitant to come out of the ground because they took a beating in the previous cycle. Across Jacksonville, Orlando and Tampa, projects are coming out of the ground, but not with the zeal that they are in South Florida, and I think a lot of that can be attributed to the increased cost of labor today. It’s just one more reason for someone who might be hesitant to go forward, someone who’s on the fence to wait, and that could slow up this cycle. With tariffs, at least so far, we’re seeing a lot of posturing. There’s a lot of rhetoric. The current administration, whether you agree with their tactics or not, seems to want to negotiate better terms on trade by threatening tariffs. So far, we’re not seeing an impact from them the way we are the labor shortage. If we were to go into a long-term trade war, that could be a different story, but we’re not there yet.”
Chief Operating Officer
“Tariffs have the potential to do a lot of damage to the growth cycle, and for some commodities, we’re already seeing the impact of them, whether they’ve officially been put in place or not. Lumber, for instance, has gone up to a higher price — and in a shorter period of time — than I have ever seen in my entire career. For stick-built, four-story multifamily rental projects like we do and invest in, the amount of the price hike as a result of potential tariffs has been significant.”
President, Southeast Region
Ryan Cos. U.S. Inc.
“I’d say both are having an impact and have the potential to at least slow things down. Labor is a macro-economic issue but we see it flare up in different ways in different places. For instance, we can’t find properly trained electricians in Charlotte, North Carolina, whereas maybe in Orlando the issue is we can’t hire drywall experts. The commonality is it’s tight everywhere. Tariffs clearly are a macro issue that may be compounded in time but they’re already affecting us. Take structural steel, for instance. You have to buy that nine months out, before you can use it on a site, but people are reluctant to set a price today for something so far out; they want to wait. So the mere threat of tariffs is already impacting us. With labor, the tightening of the southern border has affected the construction trades, but the labor market was tight even before that happened. Wages will likely take care of some of that. But I think the potential for tariffs and a trade war could have a bigger impact overall, because it affects construction pricing and so much of that business is about locking in to rates today for material in the future, and tariffs upend that because of the uncertainty they bring.”
MICHAEL C. BROWN
Executive Vice President/General Manager Florida Operations
“I see it as a pretty easy question, because one was a planned event and the other an unplanned event. We knew five years ago, for instance, that there would be a labor shortage in the construction trades, so we planned to the extent that we could for that eventual labor shortage. Based on our workload, and the demand that we have as a company, we’re largely able to work with subcontractors and get the workers we need. But we couldn’t plan a year ago, or two years ago, for tariffs. As we work on larger construction projects, we use a lot of steel and aluminum, and a lot of that is imported, so that certainly has a larger potential impact on us and the industry as we go forward. I believe the statistic is that 30% of all imported steel and aluminum go into new buildings, so the commercial real estate industry and construction firms are uniquely positioned to be impacted by tariffs.”