Early themes from builders, remodelers and contractors indicate optimism from the election outcome partly due to clarity and certainty of administration tone for the next four years but also due to memory of Trump’s first administration’s pro construction industry perspective. Our outlook for the industry includes several upside conditions:
- The administration is focused on growth and expansion of GDP. This likely will stimulate relocation, existing home sales, home improvement and remodeling activity to prepare homes for sale or to improve homes recently purchased as well as deferred improvements or projects for repair and remodel for high-occupant office or institutional buildings
- A focus on tax cuts and inflation reduction through economic policy can create real dollar expansion for spending on major home improvement projects, including tapping into significant home equity levels with lower HELOC rates for wide-ranging projects.
- The America First platform and corresponding potential for tariffs will create expansion of domestic manufacturing, warehouse and logistics facilities, as well as repurpose or redesign of existing, low-occupant buildings to support supply chains and inventory. Additionally, we anticipate continued growth in data centers and the AI ecosystem facilities, including both new and repurposed.
- The proposed Department of Government Efficiency may have the potential to drive significant impact to the remodeling segment of the nonresidential building industry. Early strategies aimed at reducing working from home and mandating in-office work will create a near-term impact on facility upgrades and optimization, just after COVID-era redesigns for less in office work or shared work environments. Today, the Federal government operates more than 360,000 nonresidential buildings (of all types), which will need upgrades or enhanced repairs due to a resurgence of use.
- There are further benefits beyond improved demand for spending on projects that also help the business operators and owners in the construction industry. Many contractor associations are anticipating benefits due to tax code and structure, as well as regulatory process, which can create more simplicity and certainty in managing their businesses.
While there are many reasons for optimism and excitement, the new Trump administration also comes with some risks and downside potential, particularly in the areas of immigration impact to labor supply and tariff implications to select product prices and availability of critical offshore products or components.
- Tariff and anti-dumping policies can disrupt supply chains and reduce product availability for select building products, particularly categories that lack domestic production.
- High tariffs also may create short-term price inflation in building materials.
- Immigration policy may reduce construction laborers resulting in slow growth of new projects or extend time to complete projects.
To optimize benefits for those that serve in the design, construction and remodeling sectors of the industry, we recommend planning for growth while carefully monitoring policies, including specific language and incentive or enforcement mechanisms outlined.