In 2025, Vermont developers are facing a perfect storm of challenges that are hindering their ability to move forward with housing and commercial projects. High interest rates, supply chain costs, labor shortages, and tariffs on U.S. trading partners are all contributing to concerns about increased costs slowing down development.
Interest rates have been a major factor in decisions to cancel, defer, or scale back new projects, as developers struggle to cover the costs required to build. Even big projects like CityPlace in Burlington and a new hotel at the airport have cited interest rates as a reason for changes in construction plans.
In smaller towns like Bennington, challenges with new development arise due to smaller populations and limited demand for housing. Projects that would sell out quickly in larger cities like Burlington may sit on the market for years in these areas.
Affordable housing projects, however, are less dependent on federal interest rates, as funding comes from a variety of sources, including tax credits and investor bonds. But uncertainty around trade policy and federal funding is a looming concern for developers of all kinds of projects in 2025.
Supply chain disruptions caused by tariffs have already led to delays and increased costs for some projects, signaling potential challenges ahead. As interest rates remain high and additional uncertainties arise, developers are cautiously navigating the landscape to determine the viability of their projects moving forward.
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