Industry leaders in Vermont are facing a “perfect storm” of challenges in 2025, affecting developers and lenders. High interest rates, supply chain costs, labor shortages, and tariffs are all contributing to concerns that development may slow down due to high costs. The decision by the Federal Reserve to maintain interest rates has further impacted the situation.
Commercial developers, in particular, are feeling the pressure of high interest rates, which may lead to canceled or scaled-back projects. Projects like CityPlace in Burlington and a new hotel at the airport have been affected by these high costs. Developers are struggling to cover the expenses of building, leading to higher rents in newly constructed buildings.
In smaller towns like Bennington, where the population is limited, new development projects are facing challenges in attracting buyers. The housing market is saturated in Burlington, pushing rent prices up for smaller living spaces. The uncertainty surrounding tariffs and federal funding is also adding to the challenges faced by developers.
Affordable housing projects, however, are less impacted by federal interest rates due to funding from various sources. Trade policy uncertainties and supply chain disruptions are causing concerns for developers, with the potential to increase costs and delay projects. Overall, the housing market in Vermont is facing a difficult period in 2025, with developers having to navigate a variety of challenges to move forward with their projects.
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