The $50 Tariff on the Nail That Builds Your Deal

The $50 Tariff on the Nail That Builds Your Deal

Here's what's happening right now: steel tariffs are sitting at 50%. Aluminum, the same. Copper wire and cable up 22% year over year. In January alone, nonresidential construction input prices ran at a 7.1% annualized rate. That's not a blip. That's a new baseline.

JLL estimates total project costs rising roughly 8% under current tariff policy, with specific materials like steel mill products already up 17% and aluminum up 30.5% since last year. And per the AGC, nearly 500,000 skilled construction workers are needed in 2026, with 94% of contractors already struggling to fill open positions.

Translation: building anything right now costs more and takes longer than it did 18 months ago.

But here's the thing most people aren't asking. When construction costs spike, what happens to the dirt underneath? Developers get picky. Fast.

When a project's cost structure is already under pressure from materials and labor, the last thing a developer can afford is friction on the front end. Zoning uncertainty, power questions, permitting delays. Any one of those knocks the math sideways at today's cost levels.

That means sites that are entitled, infrastructure-ready, and positioned become more valuable, not less. Colliers is already forecasting a 15 to 20% increase in CRE sales volume in 2026. CBRE projects investment activity up 16%. That capital is going somewhere. And it's going to the dirt that's ready to perform.

When the Cost Goes Up, the Standard Goes Up

Every time this market tightens, a certain kind of landowner panics. Drops the price. Pulls back. Waits for "better conditions."

And every time it tightens, another kind of landowner gets to work. They don't wait for steel prices to come down. They ask: what does my site look like to a developer priced at today's cost structure? They run the proforma. They identify the friction. And they remove it before anyone asks.

Constraints don't just block activity. They filter it. When costs spike and capital gets selective, marginal sites go quiet. But the right sites get louder.

The question isn't whether construction costs will ease. It's whether your dirt is ready before they do.

1. Run the Developer's Math on Your Site. Take one parcel and model it through today's cost lens. Does the deal still pencil? If not, that's your clarity assignment.

2. Audit Your Entitlement Status. Pull up every parcel in your portfolio and ask: if a developer called tomorrow, what would slow them down?

3. Call a Developer or GC This Week. Not to pitch. To listen. Ask them what site conditions are killing deals right now.

Here's to building your success, one step at a time... from the dirt up.

Kris "Dirt Dawg" McGee 🐾