While headlines are continuing to swirl with economic uncertainty, one thing remains clear—real estate users and developers are still eager to build. However, doing so and finding a path forward requires figuring out how to navigate a changing set of market conditions, particularly tariffs and lead times.
On April 8th, the Chicago Chapter of The Society of Industrial and Office Realtors (SIOR) hosted its Speaker Series luncheon focused on construction trends, with panelists pulling back the curtain on current deal flow, lead time issues, pricing pressures and the growing demand for design-build delivery in both the office and industrial markets. The panel was moderated by Jacob Karamol, LEED AP of Development Solutions Inc., who spoke with panelists David Michael, vice president at Peak Construction Corporation; Michael Pacini, president of PREMIER Design + Build Group; and Matthew Harrity, project estimator and business development lead at TW Chicago.
Together, the panel covered the state of the industrial and office markets, inflation, strategies for addressing tariffs and material costs, and the evolution of manufacturing and labor considerations in today’s real estate environment.
Resilient Demand, Current Volatility
All panelists described entering 2025 with optimism thanks to strong preconstruction pipelines and renewed interest from users in both industrial and office interiors. However, their tone shifted a few days before the luncheon as tariff-related uncertainty and market fluctuations introduced a few new questions.
“Coming into the year, we were as busy as we had ever been,” said Michael. “But the last week has added some headwinds, particularly in Chicago, even while we’re still seeing strong activity on the coasts.”
Pacini added that although 2023 was a slower year for project origination, 2024 brought renewed deal flow, especially for design-build work with long-term planning horizons. “We saw a lot of optimism at the beginning of the year and were pretty bullish coming into 2025,” he said. “But the last few weeks have been a head-scratcher. We are all sitting on the sidelines and no one is making any money or doing anything. There has been a lot of confusion, but still, the appetite and demand to develop is there.”
Harrity agreed demand hasn’t cooled—especially downtown. Amenity centers, spec suites, and high-end retail are all picking up and expect a lot more foot traffic, he said. “Landlords are investing to stay competitive and attract tenants.”
Tariff Talk and Lead Times
One of the hottest topics of the discussion was the uncertainty introduced by new tariffs and the resulting ripple effects across construction materials. While none of the panelists noted any immediate devastating impacts, all said that they are preparing their clients for potential increases.
Pacini described running a full material cost impact analysis over the weekend with his team, estimating worst-case tariff scenarios could result in a 3 to 4% increase on typical industrial shells. “We’re not seeing catastrophic numbers—yet,” he said, “but our job is to isolate risk and guide our clients through it.”
Michael added that although tariffs have not yet derailed projects, the unknowns are driving changes in buyout strategy. He explained that he is being honest with clients and advising them to lock in pricing when possible and expect volatility for the next three to nine months.
Lead times for many core materials such as precast, steel, and roofing have normalized, panelists all noted. The bigger challenge now, they explained is power and public utilities, with Michael noting that switchgear, large generators, and utility responsiveness—especially in markets with heavy data center activity—are delaying projects far more than typical building materials.
Design Build, the Value of Speed
All three of the panelists stressed the value of early engagement and speed-to-market in the current environment. They noted that it is one of the core advantages of design-build delivery, especially when it comes to mitigating risks tied to tariffs, lead times, and inflation.
“When the GC comes in with the architect at the same time, you can make smarter, faster decisions about materials and scheduling,” said Harrity. “We’re finding alternate options—reusing doors from the building, using temporary doors, swapping brands—whatever it takes to stay on track.”
Pacini agreed and noted that the best thing you can do for a client is isolate exposure and buy early. He also said to get creative, which is where a design-build approach gives you the edge. “You need to figure out what the exposures are and if the deal can still pencil if all of the exposures come to market.”
Labor, Location, and Talent
Whether it is subcontractor availability, recruiting the next generation of estimators and supers, or building culture through office amenities, labor continues to be a top challenge, panelists agreed.
Michael described investments his firm made in upgrading its Rosemont headquarters to retain talent, while Pacini pointed to some aggressive early career hiring strategies. “We’re going into high schools, into colleges and trying to grow talent internally, from the ground up. The people we need just don’t exist in the market like they did 10 years ago.”
Harrity agreed, noting that location also matters. “We’re seeing younger workers want to be downtown. That’s where the energy is—and it’s shaping how we build teams and where we work.”
Opportunities in Manufacturing, Mid-Sized Projects
As the conversation wrapped up, all three panelists were bullish on opportunities ahead, particularly in terms of manufacturing or mission critical facilities and smaller-footprint urban infill.
According to Pacini, manufacturing expansions are heating up across the country and while the megaprojects are in the headlines, there is a lot of activity with entrepreneurial users looking for 25,000 square feet to 50,000 square feet. “Those deals are everywhere,” he said.
Harrity pointed to signs of life in downtown Chicago, where full-floor office suites are being carved into smaller units and leasing up quickly. He noted that high-end retail is investing again, which he says indicates that people believe in the office comeback.
Overall, panelists at the SIOR luncheon agreed that navigating today’s construction landscape requires more than cost control. They agree that it requires good strategy with cross-disciplinary collaboration, and bold decision-making in uncertain times.
Ryan Moen, is president of the SIOR Chicago Chapter and principal and founder of Versa Real Estate Services. For more information on the SIOR Chicago Chapter or its Speakers Series luncheons, visit siorchicago.org.
