The Rent Roll with Jay Parsons EP #31 Scott Villani & Dan Hull | How Tariffs Impact Apartments & BTR
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Apr 24, 2025 Scott Villani, Chief Strategy Officer at NRP Group, and Dan Hull, President of NRP's Construction Business, delve into the significant impacts of tariffs on apartment development. They discuss how tariffs affect construction costs and supply chains, while revealing that the total impact might be less severe than anticipated. The duo shares insights about the current lease-up environment and highlights which markets are rebounding fastest. They also reflect on the resilience of the apartment sector amidst economic fluctuations and evolving demand.
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Tariffs' Limited Cost Impact
- Tariffs have less impact on construction costs than many expect, with most developers seeing low to mid-single-digit percentage increases.
- Interest rate spikes have been a much bigger factor in reducing construction and development activity.
Market Absorbs Tariff Costs
- Vendors are absorbing some tariff cost increases due to construction market slowdown and competition.
- Supply chains have diversified away from China since 2018, softening tariffs' effects on materials.
Tariffs Delay Rent Impact
- Tariffs may slow supply, but any rent impact will take years to appear due to development timelines.
- Increased recession risk from tariff-induced economic slowdown is a bigger threat to demand and rents.