Get back to work with a Propmodo membership | Use code FALL20 for 20% off →

Looming Strike Threat Could Throw Real Estate Off the Rails

Against a backdrop of already soaring prices and untethered inflation, a looming U.S. rail strike over grueling working conditions and lackluster compensation poses a severe threat to the economy which will ripple into the built environment

So what’s going on? Well, following the failure of a two-year contract negotiation process between railways and two of the largest unions representing a sizable number of railway workers, a legally mandated 30-day cooling-off period ends this Friday. In the event that it occurs, more than 90,000 members of 13 different unions will walk off the job, making it the first railroad strike in 30 years. 

While the Biden administration is clamoring to broker an eleventh-hour deal to carve out better compensation, working conditions, and benefits for rail workers, agencies are already bracing for shutdowns. The four largest railroad systems in the U.S. have started curtailing rail service to avoid passengers and goods from being stranded in transit in the event that no deal is breached and thousands of workers walk off site.

The stakes are extremely high because rail transports approximately two-fifths of long-distance American freight and one-third of exports. A nationwide strike would cost the American economy a staggering $2 billion a day, according to a new report from the Association of American Railroads. 

There’s no doubt that a U.S. rail strike will have far-reaching effects, and unfortunately, real estate is not immune. Commercial construction is burgeoning at a record rate in many of America’s major cities, and a rail strike would directly threaten construction projects as builders will inevitably encounter delays and price hikes on lumber and raw materials. While President Biden just announced that a tentative strike deal was reached following all-night talks into the wee hours of this morning, let’s cross our fingers that negotiations can be finalized before the clock strikes twelve on Friday, lest real estate construction be mired in yet another supply chain crisis. 

Image - Design