New Jersey’s construction and development industry continues to face a complex mix of opportunity and uncertainty as tariffs, power availability and energy costs increasingly influence project feasibility, panelists said during a recent NJBIZ virtual discussion.
The Dec. 16, 2025, Construction & Development Panel, moderated by NJBIZ Editor Jeffrey Kanige, brought together leaders from development, law and health care to assess how economic pressures and policy shifts are reshaping one of the state’s most important growth sectors. Participants included Michael Barone of Rockefeller Group, Andrew Camelotto of Gibbons PC and Jose Lozano of Hackensack Meridian Health.
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During the 90-minute discussion, panelists addressed rising construction costs tied to tariffs, evolving lending conditions, workforce challenges and the sectors showing the most resilience. While uncertainty has tempered some activity, health care, industrial and transit-oriented projects continue to drive development across the state.
With commercial real estate long serving as a pillar of New Jersey’s economy, the panel focused on how tariffs introduced by the Trump administration have complicated cost forecasting and procurement.
Barone said, “I’ll come at this from an industrial development experience because frankly the projects are so copy and paste that you kind of get a really good sense of what a warehouse should cost and you get really good price trends over the years. When tariffs dropped back in April, there was a lot of uncertainty in the market … There was a wait and see mentality around it because, as we know, it seems like every few weeks or at least months, tariffs change and suppliers are able to work around certain restrictions by finding different routes to import products.”
According to Barone, industrial construction costs are up roughly 4% this year due to tariffs, higher steel and aluminum prices, inflation and rising mechanical, electrical and plumbing expenses. While slower construction starts have temporarily softened the impact, he warned that cost pressures could intensify as development activity rebounds.
Despite broader market uncertainty, health care development remains strong, Lozano said, driven by the growing shift toward outpatient and ambulatory care.
“Health care is not slowing down in any shape or form. And it’s not just Hackensack Meridian Health. You’re seeing this across the country as much more health care is being done outside the four walls of a hospital. We’re seeing a burst of ambulatory care centers. Ambulatory care centers meaning much more of the services being provided not on the hospital campuses, but having mixed specialties, primary care, urgent cares.”
While construction itself has been less affected, Lozano noted that tariffs and global supply chain pressures continue to affect the cost and availability of medical equipment and furnishings, prompting many providers to proceed cautiously.
Camelotto added that tariffs have also reshaped financing dynamics, shifting risk down the chain from lenders to developers, contractors and subcontractors.
“I would also say the uncertainty generally seems to have the effect of making construction and development more challenging because of the trying to predict the end user at the end of your construction cycle. So, I think that’s another area where it’s become more challenging in that you have a lot of companies that they’re not quite as committal as they might otherwise have been if they know where things are going to be in the next three to five years,” he said.
While contractors are seeking alternative suppliers where possible, panelists said owners and developers are often left absorbing tariff-driven cost increases, particularly for specialized materials with long lead times.
Rising energy costs and power availability emerged as a central concern, particularly for health care and industrial users with around-the-clock operational demands.
Lozano said, “We run seven days a week, 24 hours a day. Unfortunately, we do not get the luxury of closing down for the holidays. And so what we at Hackensack Meridian Health did a couple of years ago, we significantly invested on sort of our own energy master plan and we started the process of investing in solar panels and battery power storage to be able to control our peak times and then moving us into off peak times to try to minimize our overall costs.”
With annual energy expenses potentially exceeding $60 million, Hackensack Meridian Health has increasingly turned to onsite generation and storage to manage peak demand.
Barone warned that power availability is becoming a major constraint for industrial and warehouse projects, especially in South Jersey.
“New Jersey’s attractiveness as a data center market is purely based on proximity. It is not a cheap power market and I believe that the majority of the hyperscalers you hear about are going to be looking in Pennsylvania and other states in the Northeast and Midwest for the larger facilities … And I don’t see a way that without government assistance that those costs can be competitive with the current limitations on the grid,” he said.
As a result, developers are exploring onsite generation options that were previously considered impractical.
“I will say that we’ve gone so far as to explore onsite generation from gas turbines and solar to battery storage that we would never have looked at three years ago just to support lease up on these sites,” Barone added.
With Gov.-elect Mikie Sherrill set to take office in January 2026, panelists said energy policy is likely to become an even greater focus in Trenton. Lozano said diversification will be key.
“I think they have to diversify the supply. We are not going to be able to build our plants in a manner and at a pace that we need to drive costs down. And so, we’re going to have to really run on all major spigots and diversify what they can from a clean energy perspective.”
He added, “And, at some point the nation’s going to have to have a conversation about nuclear. Do we bring nuclear back and do we expand? I just think we’re at a point right now that one solution is not going to be it.”
Despite challenges, panelists highlighted continued momentum around transit-oriented development, public-private partnerships and adaptive reuse projects, including Hackensack Meridian Health’s $200 million Metropark health and wellness center and NJ Transit’s LAND Plan initiative.
Camelotto called the LAND Plan “a win-win,” noting its potential to monetize underutilized assets, increase ridership and stimulate mixed-use development around transit hubs.
Originally reported by Kimberly Redmond in NJ BIZ.
