Construction Industry Update: Reflections on the First Half of an Unpredictable Year
As we move through the midpoint of 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 tempered new warehouse development. Developers with multiple unleased properties are holding off on speculative builds, and across the board, we’re seeing fewer bid requests, particularly for warehouse and logistics projects that serve global e-commerce operations.
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 are honored to be a trusted partner, helping clients grow and expand their operations with confidence.
The industry may be navigating a slower season in some sectors, but opportunities still exist for those prepared to meet them with focus and flexibility. At Penntex, we remain committed to building value through relationships, working collaboratively to support thoughtful planning, and helping our clients move forward with clarity—even in times of uncertainty.