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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Supply Chains Shift Away from China
- Most finishing materials like kitchen fixtures and appliances previously sourced from China are now mostly sourced from other countries.
- Countertops, light fixtures, and plumbing fixtures have diversified sourcing to Southeast Asia, Mexico, and India.
Vendor Cost Absorption May End Soon
- Vendors absorbing tariff costs now is not fully sustainable; cost increases may come in second half of 2025.
- Both multifamily and single-family home starts dropping increase competition and keep costs down temporarily.
High Rates Pose Greater Challenge
- Higher interest rates have caused a bigger financial challenge than tariffs for apartment developers.
- NRP Group uses its scale and integration to shift focus to products and markets better able to withstand rate pressure.