OVERVIEW: Experts from CBRE, the world’s largest commercial real estate services and investment firm, can assess the impact of the imposition of tariffs on steel imports on the development of office and industrial properties in the United States.

AREAS OF COMMENTARY:

While costs vary by asset type, local market conditions and types of construction materials used, high-rise office and industrial building construction costs may rise modestly.

Some steel suppliers recently increased their bid prices for wide-flange steel shapes by $300 to $400 per ton, rebar bid prices by 5 percent to 8 percent and metal stud bid prices by 3 percent to 5 percent in anticipation of tariffs.

Despite the potential for increased costs, the overall impact of steel import tariffs on commercial construction activity nationwide is expected to be negligible.

A shortage of skilled labor continues to have a more significant effect on total construction costs than does higher steel prices.

CBRE INSIGHTS: Attributable to Spencer Levy, CBRE’s Senior Economic Advisor and Head of Research, the Americas:

“An increase in steel prices due to the tariffs could exacerbate current cost pressures on commercial real estate developers, landlords and tenants, due to higher tenant-improvement buildout costs. This, in combination with the continued effects of skilled construction labor shortages, could cause development activity to slow unless rent growth is sufficient to offset higher costs.”

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.