Five Ways to Help Weather the Ups and Downs of the Commercial Property Market

By Steve Carey, CAWC

Commercial property owners and developers have had a tough time in recent years dealing with the effects of extreme weather. However, in 2025, they may be facing a new challenge – tariffs.

As tariffs continue to fluctuate, impacted countries are considering retaliating with tariffs of their own on American goods. That includes building materials.

Building materials may become more expensive, which drives up the cost to build a new commercial property or replace a damaged property.

Take lumber, for instance. With nearly 12 billion board feet of softwood lumber coming from Canada in 2024, according to the National Association of Home Builders, the tariffs could have a profound effect on construction projects going forward. Tariffs on Canadian lumber would be piled on top of other tariffs already put in place for those materials.

In addition, domestic steel prices are up due to increased demand from American firms trying to avoid buying higher-priced materials from abroad.

As the cost of materials goes up, so does the cost of the overall project.

If a construction project has not yet started, it may not break ground anytime soon, warned the Associated General Contractors of America in April. Projects already started could be delayed.

Those trends are causing insurers to take a few steps back from the market because they don’t want to absorb more risk. Some are even reducing the amount of coverage they will provide for certain market segments, such as apartment buildings and shopping centers.

Five Things You Can Do

As inflation remains uncertain, there are steps commercial property owners and developers can take to mitigate risk and adapt to changing conditions.

1. Be efficient. Install an HVAC system that will protect your building from weather damage.
2. Diversify your suppliers or, as the saying goes, don’t put all your eggs in one basket. Look for new vendors in a variety of geographic areas to protect yourself against high tariffs across the board.
3. Write a smart contract. Include clauses that will protect you from a tariff war and any cost increases it might cause. Negotiate with your suppliers for more favorable terms.
4. Focus on sustainability. Tenants value sustainable practices such as using renewable energy and adhering to green building standards.
5. Toughen up your buildings. Add features to help your buildings withstand extreme weather, such as tornadoes and hurricanes. Use resilient building materials, such as a strong roof and windows and doors that can endure impact.

The experienced team at Oswald can help you identify and mitigate your risks.

For more information, contact us below or visit our Property & Casualty page here.