In the ever-evolving landscape of commercial real estate, fluctuating tariff policies are prompting developers and investors to carefully consider their options. Many are opting for a "wait-and-see" approach to their ongoing and upcoming projects. Recently, Brad Skidmore shared his insights with The Business Journals regarding the impact of tariffs on project deals.

While some projects have decided to pause their deals, Skidmore emphasizes that there are circumstances where it’s wise to proceed. He notes that projects that have already invested significant time and resources are generally committed to moving forward, while those further down the road are being put on hold. Projects without firm financial commitments are particularly affected, as real estate groups aim to delay until there is clearer guidance on tariff policies.

"If it’s credit-worthy parties involved, I’m not seeing outright cancelations," Skidmore said. "I don't think anybody has gotten to that dire of a situation yet. That can well change between now and June 30. [But] it's too early in the year and, I think, it’s too early ... for the panic to set in."

Skidmore highlights that the current uncertainty surrounding tariffs and associated costs is likely to further limit capital available for real estate deals. With interest rates climbing and a retreat from traditional lending sources underway, securing financing has become increasingly challenging in recent years. Therefore, more operators in commercial real estate might seek alternative capital sources, such as private credit.

As the impact of tariffs continues to ripple through the sector, many contracts are beginning to incorporate mitigation strategies to handle potential increased costs. While this is a promising trend, Skidmore points out the difficulty in crafting effective out clauses in contracts amidst such an unpredictable environment.

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