In Los Angeles, a cloud of uncertainty hangs over construction projects and real estate deals, primarily influenced by fluctuating tariffs, federal policies, and broader economic conditions.
At Bisnow’s Los Angeles Construction and Development Conference, Andrew Parker, partner at Bayspring Real Estate Partners, highlighted the prevailing mood of caution among industry professionals.
The challenges are multi-faceted, with tariffs contributing to a general inability to predict key elements of projects, such as costs and timeline efficiencies.
Parker noted that the current environment complicates deal-making and may lead to decreased work for those in the sector.
As a result, many attendees at the event expressed similar sentiments, emphasizing the impact of tariff uncertainty more than immediate cost hikes.
Marc Ness, Lead of DPR Construction Southern California, stated that it is the unknown repercussions of tariff regulations that are halting projects.
If there were clarity on the tariffs, he suggested, it would enable better planning and negotiation.
In an environment fraught with unpredictability, construction professionals are forced to examine their supply chains closely, seeking out domestic alternatives for materials if necessary.
Some are taking proactive measures, purchasing materials preemptively to mitigate the risk of sudden price increases in the future.
However, not all industry players share the same concerns about tariffs.
Dewain Campbell, a director of construction and development at McCarthy Cook, referred to tariffs as a ‘nothingburger’ in the context of his projects.
With hundreds of millions of dollars in work currently underway, he reported minimal impact from tariffs on cost hikes, attributing any increases to around 3% for materials such as steel and rebar.
Campbell acknowledged that his company’s limited use of lumber may insulate it from broader financial impacts that others might face.
Overall, he concluded that the tariff situation does not warrant excessive worry at the moment, especially compared to other pressing issues within real estate development.
There’s a stark contrast between the opinion of some construction leaders and forecasts from academic and industry analysts who predict significant ramifications from ongoing tariff policies.
Many experts have sounded the alarm about potential long-term damage if the proposed tariffs become permanent.
The uncertainty created by these tariffs has already been felt across various sectors, including construction and hospitality.
A UCLA Anderson School of Management forecast anticipates that California’s economy is likely to face contraction due to looming tariffs and immigration raids that will severely affect various critical industries.
Jerry Nickelsburg, the director of the Anderson Forecast, explained that fears about employment stability and unpredictable cost structures are leading to a state of “decision paralysis” among businesses and consumers.
Ultimately, Nickelsburg believes this paralysis will ease once clearer policies are established, but that clarity remains elusive for now.
As the construction and development community navigates these turbulent waters, the prevailing consensus remains that while tariffs are among numerous concerns, the true worry lies in the uncertainty they create.
For many in the industry, predicting costs, securing materials, and closing deals remains challenging amid this ongoing unpredictability.
Despite the diverse reactions from various stakeholders, it is clear that the uncertainty tied to tariffs and federal policy continues to loom large in shaping the future of Los Angeles’ construction landscape.
image source from：bisnow
