Tariffs Deal Setback To Push For Sustainable Building Materials
As developers look for innovative ways to build projects that meet sustainability goals while remaining affordable, President Donald Trump's proposed tariffs could stifle progress.
For years, the construction industry has faced hurdles from macroeconomic impacts like high interest rates, labor shortages and increased construction costs that made it hard to pencil projects.
Now developers are worried about the impact of tariffs. Trump on Feb. 1 signed an executive order implementing a 25% charge on products imported from Mexico and Canada and a 10% charge on goods from China. Two days later, he agreed to a 30-day pause on the Mexico and Canada tariffs.
Especially in states like Massachusetts that have ambitious sustainability goals, tariffs could make it harder to find cost-effective, environmentally friendly construction materials, experts said at Bisnow's Boston Construction, Development & Design Summit last week.
"Things like the trade war are only going to drive cost materials up, cost of construction and it creates broader uncertainty, which means that inflation is going to still be a risk," The HYM Investment Group Vice President Josh Billings said at the event, held at the Boston Marriott Long Wharf Hotel.
Construction input prices rose 1.4% in January from December, according to a report by the Associated Builders and Contractors, which said the expectation of tariffs contributed to the uptick.
Mass timber has been growing in popularity as a sustainable building method, but approximately 30% of the softwood lumber used in the U.S. comes from Canada.
In Massachusetts, many architects have used cross-laminated timber — a type of mass timber that consists of multiple layers of timber glued together — as a way to meet the state's sustainability goals. The use of CLT helps reduce embodied carbons in projects. The building material has begun to gain popularity among universities and other institutions.
"About a year or two ago, we started looking at CLT when we started looking at Charlestown. We were really excited about doing CLT, and it felt like that was the right time to hit the market," Stantec Senior Associate Ray Kettner said. "That's an exciting space, but unfortunately Canada is our main supplier."
Across the Boston metro area, there are eight active construction projects totaling 1.3M SF that are utilizing mass timber as a building material, according to the Boston Planning Department. There are also 22 future projects that have been proposed with mass timber commitments totaling 4.3M SF.
Of these developments, six are part of the city's Mass Timber Accelerator program that was put in place in 2021 to fund the projects and monitor the impacts of building with wood.
"Primarily, where we are seeing [CLT projects] happen is on the coast and the North," HLB Lighting Design CEO Carrie Hawley said. "Massachusetts is a leader in this. The New England region is a leader in it, particularly in the higher ed sector. We're seeing tons of clients being willing to invest in it."
As part of Harvard University and Tishman Speyers' first phase of its 900K SF Enterprise Research Campus in Allston, the partnership plans to build a "treehouse" conference space that will be built from mass timber.
Earlier this month, Boston University proposed to build a 12-story, 70K SF mass timber building to house the university's Pardee School of Global Studies, Wood Central reported. It's part of the school's larger goal to replace embodied carbon in its buildings.
Billings said proposed tariffs could present a risk for many developers ,especially as the mass timber market continues to grow and contractors are familiarizing themselves with how to use the building materials.
"We're actively trying to identify projects where something like cross laminated timber would be a good fit," Billings said. "It'll be interesting to see what tariffs do to the pricing decision between a steel concrete system versus a CLT system."
As developers and architects brace for the impact of tariffs, Kettner said it is the latest of many issues that have put pressure on their projects.
"My big concern is that we just got over talking about supply chain issues as the catch all for why a subcontractor was failing," Kettner said. "The tariff will be the new word to use. 'Tariffs, that's the reason I can't deliver on time.'"
