Page 16 - JUNE 2022

Construction Industry

CHALLENGES

Pricing and Timing Harder to Forecast

By Neil Potter

enants and landlords are Market trends in the interior Real Estate Investment Trusts) are
struggling with an environ- construction division point toward stockpiling materials (like loading dock
ment where construction higher subcontractor demand due levelers) making issues even worse.
is much more complicated to latent projects breaking free. We In conclusion, construction is
Tthan it was previously. are seeing a slight rise in overall much more complicated than it was
Both pricing and timing are harder to subcontractor costs, but mainly in previously. Both pricing and timing
forecast. Tenants looking for highly the drywall, acoustical ceiling, and are harder to forecast.
customized space need to start the pro- metals divisions. The market is not
cess at least four to six months earlier fully saturated with work and as more RECENT LEAD TIMES
than normal, and landlords are leaning projects come online, one can expect ▪ Switch Gear – 52 Weeks from
into pre-built “spec” suites as a solution costs to rise accordingly. Approved Submittals
for smaller tenants. Supply chain issues including ▪Fixtures – 12-24 Weeks
The construction industry has metals and carpet remain a challenge. ▪Generators – 48 Weeks
faced an impact in several areas due Lighting, switch gear, doors, and ▪Doors – 16 weeks
to pandemic-induced supply chain appliances also have long lead times. ▪Ice maker – 32 Weeks
disruptions. Material procurement has These issues are continuing to delay ▪Frames – 3-6 Weeks
become challenging with the associated substantial completion of projects ▪Appliances – 16 Weeks
cost escalations and availability. Other beyond their intended dates and should ▪Carpet – 8-10 Weeks
specialized components continue to be be planned for accordingly.
sparse with limited options to expedite, Material and labor quotes are only COST INCREASES SINCE AUGUST 2021
which impacts schedules and material being held for less than a week in some ▪ Mechanical, Electrical & Plumbing –
selections. Longer delivery times for cases versus the 60 to 90 days to which Increase by roughly 35%
materials indicate that ordering prod- many were accustomed because of the ▪ Finishes – Increase by roughly
ucts early in the process will be critical rapidly changing prices and delivery 15-20%
in mitigating scheduling issues. issues. Large players (e.g., Industrial ▪ Doors, Frames, Hardware – Increase
by 28%
▪ Insulation/Fireproofing – Increase
Construction Activity Delivery Timeline
75,000 SF or Greater by 15%
▪ Millwork – Increase by 22%
24200 Via Mazzin Way 1550 on the Green ▪ Metals – Increase by 35%
Southwest Outlier CBD
September 2022 March 2024 ▪ Concrete – Increase by 16%
80,000 SF 386,000 SF ▪ General Conditions – Increase by 23%
Realty 1 Partners Skanska USA
▪ Site Work – Increase by 22%
2022 2023 2024 ▪ Earthwork – Increase by 22% N

Neil Potter is a Senior Project
4411 San Felipe 9753 Katy Fwy Manager and member of the Design
Post Oak Park Katy Fwy
May 2022 May 2023 and Construction Advisory team
77,189 SF 186,000 SF at Colliers in Houston, Texas. For
DC Partners MetroNational Corporation
further information connect with Mr.
SOURCE: CoStar
Potter at Neil.Potter@colliers.com.
16 NBIZ ■ June 2022