The developer of The Edison, downtown Milwaukee’s next high rise apartment tower, anticipates the project will see 2.4% cost increases under new tariffs imposed and proposed by President Donald Trump. Developed by Madison-based Neutral, construction on the 32-story, 378-unit tower at 1005 N. Edison St. began last month after the firm secured $133.3 million in
The developer of The Edison, downtown Milwaukee's next high rise apartment tower, anticipates the project will see 2.4% cost increases under new tariffs imposed and proposed by President Donald Trump.
Developed by Madison-based Neutral, construction on the 32-story, 378-unit tower at 1005 N. Edison St. began last month after the firm secured $133.3 million in construction financing.
Since then, the Trump administration has proposed and implemented a flurry of tariffs against trade partners, some of which supply significant amounts of construction materials for U.S. builders.
Founded in 2020, Neutral has projects under construction and proposed in Madison, Milwaukee and Fayetteville, Arkansas.
"We are not managing headlines like the recent tariff chaos; instead, we manage long-term returns," Neutral CEO Nate Helbach said in a newsletter last week. "While short-term volatility can stir up the news cycle or shake the stock market, it hasn’t changed what we’re seeing on the ground: strong rent growth, low vacancy, and deep demand in markets like Madison, Milwaukee and Northwestern Arkansas.""By adopting careful risk management practices at the outset of every project, using conservative financing, and procuring materials in advance, we position ourselves to navigate volatility and build long-term, sustainable value," Helbach said.
At The Edison, a mass timber building, Neutral is pursuing strict sustainability design guidelines and certifications, including Living Building Challenge (LBC) certification.
That standard requires most building materials to be sources locally: at least 20% within 500 kilometers, another 30% within 1,000 kilometers, and an additional 25% within 5,000 kilometers, according to Helbach, which means most of the project's materials are already sourced from U.S.-based suppliers and limits Neutral's exposure to tariffs.
[caption id="attachment_608810" align="aligncenter" width="1024"] Construction work at The Edison site in March.[/caption]
For materials Neutral does get from international suppliers, Helbach said the firm is exploring domestic alternatives for its projects that are planned or under construction. Materials the firm is monitoring closest include mechanical systems, appliances, façade assemblies, mass timber and specialty interior finishes.
For The Edison, these materials aren't expected to arrive in the U.S. until next spring.
"With 13 months between now and the expected delivery window, there is still significant uncertainty regarding how trade negotiations will evolve," Helbach said. "For example, during our recent webinar, Forest Economic Advisors suggested that mass timber may be exempt from new tariffs under the Trump administration’s executive order on reciprocal tariffs. That said, policy continues to shift almost daily, and it remains challenging to accurately predict where things will stand a year from now."
Neutral has modeled a "worst-case outcome" based on reciprocal tariffs proposed in an April 2 executive order that were then paused on April 9.
Neutral estimates a $4,006,876 increase in total construction costs for The Edison development, which is equivalent to approximately a 2.4% rise across affected trades and would translate to a reduction in the annual internal rate of return for the project's investors, according to Helbach.
"Resilience, in our view, doesn’t come from resisting the cycle—it comes from planning for it," Helbach said.
