Multiple developers now say the tariffs on steel and aluminum are raising costs on construction projects here.
Mortensen says, in its second-quarter report, that construction costs have spiked to the highest point in the last nine years. It blames steel and aluminum tariffs imposed by the Trump administration.
Kevin Daniels, of Daniels Real Estate, says it has had an immediate and sudden impact on plans.
“I don't understand the politics, but there is no point to them,” Daniels said Wednesday.
He currently has five projects in development and a track record of preserving historic buildings like Union Station and the Sanctuary in Seattle.
“We've had some real challenges recently with cost of tariffs, costs of steel, labor the uncertainty,” he said.
Daniels says his steel costs have gone up 20% in a short span at a time when labor costs have gone up dramatically.
Oak View Group’s Tim Leiweke told Bloomberg earlier this month that the cost of a privately financed new arena at Seattle Center had also gone up from $600 million to $700 million, and blamed tariffs and the cost of getting steel as a reason.
Matt Griffin, who is leading the Washington State Convention Center project, said the tariffs had a “somewhat, what not big” impact on the increased cost to complete the project, which just broke Tuesday. It is now estimated to cost $1.7 billion.
Sound Transit has already said the Federal Way Link Light Rail is significantly over budget, and that the cost of materials is to blame.
“We’re looking at about a $460 million increase in that project estimate,” said Scott Thompson of Sound Transit. “Material costs have risen, and right now we’re looking at the risk and challenges on tariffs like steel and aluminum as well.”
The Trump administration has placed a 25% tariff on steel imports and 10% on aluminum. But not all developers are citing it as a reason for increasing costs in Seattle.
Greg Smith, of Urban Visions, who has about $1.5 billion in projects in development, said the tariffs have not impacted his projects. He said labor and competition for it has been a driving factor. He says the Microsoft Redmond Redevelopment, along with projects like the Viaduct and Convention Center, have thinned available labor and the demand for it. He’s taking a wait and see approach on the impact of tariffs.
Yet, Daniels says he’s aware of projects that are slowing down because of the cost of materials, and the uncertainty over tariffs.
“They should have never gone in. That’s economics of the 1900s, but they’re in, so I hope they don’t go on at all,” he said, adding he’s concerned about an extended rise in material costs being a factor in a downturn.
“They’d be a correlation there. I wouldn’t say direct, but absolutely.”
