Construction costs are rising — What does that mean for you?
Since the beginning of the pandemic in 2020, the cost of building materials has steadily risen alongside an increasing labor shortage. Supply chain issues have caused a spike in costs and severely extended the timelines for new construction.
What is going on with construction costs and labor shortages?
According to the Producer Price Index report released by the Bureau of Labor Statistics, building materials prices are up 35.6% since 2020. Materials include softwood lumber, steel products, and ready-mix concrete. This price increase is driving up the overall costs of construction in Northeast Florida and nationwide. At the same time, the U.S. is experiencing a labor shortage crisis, having 11.3 million job openings but just 6 million unemployed workers as of February.
The big question is if costs will continue to rise or level out. Experts expect costs to fluctuate throughout 2022. While this may seem concerning, fluctuating costs provide a better outlook than steady increases. Builders need to consider and prepare for the future of this changing market.
What does this mean for builders?
Builders are having difficulty obtaining materials and affording their inflated cost, which overflows onto customers as well. With delayed material delivery and a shortage of workers, builders are having to delay new construction timelines — there is often just not enough supply to fill the demand for both materials and workers needed to complete projects by initial deadlines.
Hospitality construction is no exception. In a commercial construction market with high demand, competition for materials and providers increases. Hotels require more workers and materials than residential construction, but they also require newer technology. Builders are pushing back timelines in this sector too, but proper planning and construction checklists can help.
How do you move forward?
Despite the high costs of construction and expected delays, you can set yourself apart from competition by following recent hotel trends such as contactless entry, multipurpose spaces, and local influences. In the current environment, a reputable builder is essential to utilize these advances in hotel construction while overcoming time and cost barriers.
Every construction company is facing these challenges, but you can differentiate yourself by being a trustworthy company that delivers a quality product. Customers should trust their builders to have a commitment to integrity and have confidence in them to get the job done.
Our mission at Compass Group is to establish trust and confidence as a preeminent provider of land development, design-build, and other construction services for the commercial, industrial, religious, and residential/multifamily markets. We achieve this with our commitment to delivering superior service and ensuring our clients receive a quality finished product. Contact us today if you’re interested in building something together.
Topics: construction industry