The Impact of Tariffs on Commercial Real Estate
In today's global economy, tariffs play a significant role in shaping the cost structures of various industries. As we move further into 2025, it's crucial for businesses to understand how these tariffs will affect their operations, particularly in sectors like commercial roofing, HVAC, solar, and paving.
Commercial Roofing
The commercial roofing industry is heavily reliant on materials such as steel, aluminum, and other metals. With the recent increase in tariffs on imported metals, we can expect a rise in material costs. For instance, prices for PVC roofing materials have surged by up to 12%. This increase will likely be passed down the supply chain, resulting in higher prices for commercial roofing projects. John Kenney, a business consultant, notes, "While tariffs aim to protect domestic industries, they often introduce new challenges, including increased material costs and reduced project volumes".
HVAC Systems
Heating, ventilation, and air conditioning (HVAC) systems are essential for maintaining comfortable and safe environments in commercial buildings. The tariffs on imported components and raw materials used in HVAC systems are expected to drive up prices. Since 2020, HVAC equipment prices have increased by about 40%, with the average system price nearly doubling from $6,000 to around $12,000. Stan Kolbe, Executive Director of Government and Political Affairs at the Sheet Metal and Air Conditioning Contractors' National Association, explains, "The current tariff situation connects to broader economic challenges facing the industry, driving up steel and aluminum prices even for manufacturers sourcing domestically". This could lead to higher installation and maintenance costs for businesses. To manage these expenses, companies might consider investing in more energy-efficient systems that offer long-term savings.
Solar Energy
The solar industry has been growing rapidly, driven by the demand for renewable energy sources. However, tariffs on imported solar panels and related components are likely to increase the overall cost of solar installations. Industry experts predict that the cost of solar units could rise by as much as 30%. According to the Solar Energy Industries Association (SEIA), "While there has been significant investment in U.S. solar manufacturing, many sub-components are still imported and subjected to duties, impacting overall costs". This could slow down the adoption of solar energy in the commercial sector. Businesses looking to invest in solar power may need to factor in these additional costs and explore potential incentives or subsidies to offset them.
Paving and Infrastructure
Tariffs on imported materials such as asphalt, concrete, and machinery used in paving and infrastructure projects are expected to impact the cost of these services. The Producer Price Index for asphalt paving materials has shown a significant increase, reflecting the rising costs. Dan Pomfrett, Vice President and economic expert at Cumming, highlights, "The trade war between the U.S. and China has resulted in a series of tariffs that have had widespread impact on the construction industry, driving up material costs and causing supply chain disruptions". Higher material costs will likely lead to increased project budgets and potentially longer timelines. Companies involved in commercial paving may need to adjust their pricing strategies and seek out cost-effective solutions to remain competitive.
Elliot Ervin, Platinum Roofing
870-917-8715