— Kaufman Development
The government just dropped another data set that should make every developer, investor, and lender pay attention — inflation is flaring up again, and tariffs are part of the spark.
July’s wholesale inflation jumped by the most in three years. The Producer Price Index rose 0.9% month-over-month, the largest gain since the pandemic peak in June 2022, and 3.3% year-over-year. Translation: companies are passing on higher import costs, much of it tied to the ongoing US trade war.
Pair that with last week’s drop in unemployment claims — employers aren’t rushing to cut jobs — and you’ve got an environment where costs are sticky, labor is still expensive, and pricing power is shifting back to sellers. For real estate, that’s a tricky mix. Our projects don’t just deal with construction costs; we’re navigating everything from imported finish materials to local labor shortages. The net result is that budgets are harder to pin down and pro formas get stressed faster.
Why Cardboard Boxes Matter to Your Pro Forma
Cardboard box sales just hit their lowest second-quarter level since 2015. Sounds irrelevant until you realize boxes are an early-warning signal for retail demand. When retailers order fewer boxes, it usually means they expect to ship less product in the months ahead. That’s a ripple effect — less retail demand can slow down warehouse leasing, industrial absorption, and even last-mile delivery hub development. For my collective of companies, it’s another reason we’re careful about spec industrial builds right now, while still leaning into multifamily and mixed-use where the fundamentals are more resilient.
The Intel-Ohio Story and Public-Private Crossovers
The Trump administration is reportedly talking to Intel about the US taking a stake in its delayed Ohio factory hub. That’s more than a tech story — it’s a signal that public-private investment is back in play in a big way. For developers, this matters because these megaprojects create knock-on demand for housing, infrastructure, and services in their host regions. We’ve built Kaufman Development to be agile in capturing those opportunities when they surface.
Immigration Crackdowns and the Labor Equation
Here’s another headwind: Trump’s immigration crackdown is pulling in more people without criminal records — 37% of recent arrests fit that description, up from 13% in December. For construction and real estate, immigration policy directly affects labor supply. Fewer workers mean tighter schedules, higher wages, and greater pressure on subcontractor availability. If you’re not already building contingency into your timelines, you’re setting yourself up for overruns.
Work-from-Office and the Office Market
North American banks are requiring employees to be in the office 4.2 days per week, compared to 3.4 in Europe. That’s not just corporate culture — it’s demand creation for certain types of office product, especially high-quality Class A space in financial hubs. Our approach is to track these shifts market-by-market, knowing they can influence both absorption rates and the conversion opportunities for obsolete stock.
The Dollar’s Role in the Bigger Picture
The dollar is still the world’s reserve currency, but US policy is making it a little less unique. If central banks diversify into other currencies, it could reduce America’s leverage on the global stage. That has real estate implications — foreign capital flows into US assets could become more volatile, and debt markets could price risk differently.
What This Means for Our Portfolio
Across Kaufman Development and our network of companies, these trends reinforce one truth: development is no longer just about finding dirt and putting up a building. It’s about reading macro shifts — trade policy, labor dynamics, capital flows — and translating them into investment strategies that work in real time. Whether it’s adjusting unit mix in a multifamily deal, rethinking the timing of a ground-up project, or structuring financing to weather rate volatility, the goal is the same: position our portfolio to win regardless of the headlines.
If you’re investing, developing, or lending right now, you can’t afford to treat these macro stories as background noise. They’re the operating environment. And if you can read them right, they’re also your competitive edge.