As we reach the mid-year point, the real estate industry faces many unknowns. Drawing from our unique vantage point involving more than 250 active developments across most U.S. states totaling in excess of $52 billion in construction costs, we're sharing key market patterns.
After a fast-paced start to 2025, Washington’s policy on tariffs caused a slowdown earlier in March as developers evaluated potential supply chain issues and cost uncertainty. However, activity has rebounded over the past two months, and SPD has seen a more than 50% increase in client requests for our due diligence advisory services on debt and equity investments for the first half of 2025 versus the same period last year. Based on our portfolio of active projects, we are observing:
· A slowdown in industrial and data-center project starts.
· Continued strong growth in high-end condominium projects in South Florida.
· The New York area residential market is bouncing back with rental developments, especially in Gowanus, Brooklyn and Jersey City, New Jersey.
· New York City is leading in office-to-residential conversions including the new Pfizer Headquarters transformation into 1,600 units. Other cities like Chicago are starting to follow, indicating that some Central Business Districts will come back as offices buildings are renovated for other uses.
As we noted in February, an ongoing concern is how Washington’s immigration policies affect the construction industry. Over the past six weeks, ICE has raided 15 of our projects. We will look for the ways in which these actions may impact the workforce, budget and schedule in markets where enforcement activity is concentrated.
While these observations reflect our specific portfolio experience and may not represent all market segments, our broad geographic and project-type exposure across the country provides meaningful insights into current industry trends. We'll continue monitoring these developments across our national portfolio and sharing insights as market conditions evolve.
