Jim Hoolehan at Penntex Office

Construction Industry Update: Reflections on a Year of Shifting Dynamics

As we progress through 2025, it’s clear that uncertainty continues to define much of the construction landscape. Ongoing shifts in federal tariff policy, especially those affecting key materials like steel, have created a ripple effect of caution among developers and owners. In many cases, the unpredictability of these economic variables is giving project stakeholders reason to pause, assess, and wait for greater clarity before moving forward.

In our region, vacancy rates in the industrial market remain elevated. Historically, a 4–5% vacancy rate is considered healthy. Today, we’re seeing some areas at 10–11%, which has understandably shaped the pace of new warehouse development. While overall demand has moderated, Penntex continues to remain active in this sector thanks to our specialization in the region and strong long-term client partnerships. Developers with multiple unleased properties are holding off on speculative builds, and across the board, we’re seeing fewer bid requests from certain global e-commerce players. Even so, warehouse project activity has remained steady for our team, reinforcing the importance of thoughtful planning.

These dynamics are real, and we’re not immune to them. But at Penntex, we’re staying grounded in what we know works: supporting our clients with transparency, leveraging our experience and scale to maximize value for our clients on every project, and remaining agile as conditions evolve. A significant part of that agility involves closely monitoring material pricing, particularly concerning steel, where tariff-related uncertainty has made cost forecasting more challenging than usual. We’ve seen pricing spike, stabilize, and threaten to rise again in a matter of weeks, with steel producers often taking a “wait and see” approach in response to federal announcements. Through it all, our team remains vigilant, tracking trends, maintaining open communication with suppliers, and securing early commitments to protect pricing whenever possible. This real-time visibility enables us to guide clients in making informed purchasing decisions that reduce risk and control costs, even in unpredictable conditions. That level of focus is what’s helped us maintain a strong backlog for the remainder of 2025, and it’s what gives us confidence looking ahead.

This moment also reinforces the importance of adaptability. Over the years, we’ve learned that market cycles require more than persistence—they require a willingness to pivot strategically. That’s why we’re putting increased focus on the manufacturing sector, where activity continues to emerge in thoughtful, incremental ways. Increasingly, we’re seeing manufacturers with existing operations across various industries invest in optimization and expansion, and we’re supporting numerous impactful projects that reflect this trend. From the ResinTech warehouse addition and Freshpet’s production expansion to the Reitnouer manufacturing facility and Lassonde’s new beverage processing plant, these builds reflect both the diversity and depth of experience our team brings to complex industrial construction. Manufacturing projects require a tailored approach, often on active sites with precise process and infrastructure needs. We take pride in being a trusted partner, helping clients grow and expand their operations with confidence.

The industry may be navigating a shifting season in some sectors, but Penntex continues to move forward with strength. Opportunities remain for those prepared to meet them with focus and flexibility—and our team is committed to delivering value through relationships, supporting thoughtful planning, and helping clients advance with clarity, even in times of uncertainty.