President Trump’s tariff threats and immigration policies will likely hit the construction industry.
Though few South Florida developers want to talk about it (at least with me), the expectation is that tariffs on materials like imported steel, aluminum and lumber will drive up costs, causing a reduction in net operating income.
Many developers say the tariff threats are just a negotiation tactic. But some have been preparing for months.
“Some developers and contractors were pre-buying materials before the election and stockpiling them. Other developers didn’t believe they would happen,” said Suzanne Amaducci, who chairs the real estate and finance practice at Bilzin Sumberg.
“What [the tariffs] are going to be at the end of the day, I don’t know,” she added.
In February, homebuilder sentiment dropped to its lowest level in five months, in part due to mounting concerns over tariffs, elevated mortgage rates and construction costs, according to an index by the National Association of Homebuilders. Even billionaire hedge fund manager Ken Griffin has spoken publicly about the negative effects of Trump’s tariff policies.
Deportations are also expected to hit the construction workforce hard. Contractors and subcontractors will feel the pain, as they have to honor costs outlined in their contracts with developers. And developers, for the most part, are still incentivized to work with their contractors and subcontractors to ensure their projects get completed, even if that means spending more.
Contractors are required to comply with the law, including who they hire, but “there’s definitely concerns about a lack of employees or increased cost of employees,” Amaducci said.
While South Florida isn’t immune to these effects of the Trump presidency, its real estate market is still outperforming that of other major cities in the U.S. And in other ways, the region is benefitting from a big Trump bump. (See our story on the post-election boost in ultra-luxury resi deals.)
Overall, Amaducci and others expect interest rates will stabilize, leading to more predictability, which is good for commercial real estate and new development.
“If that’s the case, then it’s finally time to reprice all of these assets that have been out there,” she said. “Everyone’s biggest excuse was the election, and guess what? Now it’s over.”
What we’re thinking about: Where will WhatsApp co-founder Jan Koum end up buying a home in Miami? And what’s going on with Tom Brady’s Indian Creek property? Send me a note at kk@therealdeal.com.
CLOSING TIME
Residential: Edward and Ashley Brown sold their Bears Club estate at 152 Bears Club Drive in Jupiter to Frank and Dolores Mennella for $48 million, a record for Jupiter. Edward Brown is the retired head of Patrón Spirits.
Commercial: Produce distributor Sun Belle sold the cold storage facility at 2323 Northwest 72nd Avenue near Miami International Airport for $25.7 million. IP Capital Partners acquired the 77,607-square-foot warehouse in a sale leaseback.
NEW TO THE MARKET
British billionaire Chris Rokos is asking $150 million for his 2.8-acre oceanfront estate in Manalapan. The hedge fund manager and founder of Rokos Capital Management paid $40 million for the property at 1370 South Ocean Boulevard in 2017. He tapped William Raveis Real Estate’s Jack Elkins to list the 29,500-square-foot, nine-bedroom and eleven-and-a-half-bathroom mansion.
A thing we’ve learned
More than 8,000 web pages on U.S. government websites were removed beginning in late January, according to a New York Times analysis. That included web pages with information on scientific research, veterans’ care, hate crimes, and federal building and lease data (h/t to our researcher Adam Farence for spotting the latter).
Elsewhere in Florida
- President Donald Trump publicly endorsed Republican Rep. Byron Donalds if he decides to run for governor of Florida in 2026. Gov. Ron DeSantis’ wife, Casey DeSantis, is also reportedly considering a run to replace her husband, who is term-limited. NBC News reports that DeSantis has been making calls about his wife’s potential run.
- Gov. DeSantis said he would support a constitutional amendment to eliminate property taxes, which could have major consequences for public safety, local governments and schools, according to CBS News. At least 60 percent of voters would have to approve such a ballot measure.
- A Florida man is being held in jail without bond after he shot 17 times at two men he thought were Palestinian, ABC News reports. The victims are tourists from Israel, who did not know the shooter, Mordechai Brafman. Brafman was charged with two counts of second degree attempted murder.
