### Office Construction Costs Decline, Yet Headwinds Continue
A slowing rate of inflation has led to a decrease in construction cost increases, bringing them below their five- and 10-year averages. However, the industry still faces challenges due to newly imposed U.S. tariffs on imports from key trading partners such as Canada and Mexico, according to Cushman & Wakefield’s latest report. The firm’s **Winter 2025 General Contractor Sentiment Survey** indicates that rising labor costs and increasing prices for essential commodities like lumber, steel, copper, and cement are expected to persist throughout the year.
“While we’re seeing the pace of inflation slow on construction costs, there remain serious headwinds and uncertainty about the impact of tariffs and labor shortages on the construction industry,” said **Brian Ungles, President of Project & Development Services, Americas** at Cushman & Wakefield. “Our survey shows that general contractors expect permitting times will continue to be a major pain point as well.”
Additionally, the office construction pipeline across the Americas has declined **40% year-over-year**. With fewer new office developments coming to market, occupiers may need to focus on upgrading and modernizing their existing spaces to meet evolving workplace needs.
