Due to the challenges of the pandemic, the prices of construction materials are skyrocketing, and developers are trying to find safer and better ways to build. Back in a 2019 newsletter, I reported that construction costs had increased OVER 40% since 2013. While last year saw a less dramatic increase, the cost of construction continues to rise.
COVID-19 has made construction a difficult field to predict and control—with rising prices, supply shortages, and delays.
What is the current situation?
- According to the report Q4 2020 U.S. Chamber of Commerce Commercial Construction Index, 71% of contractors surveyed are facing at least one material shortage.
- Lumber was the most-cited material shortage (31%) and prices continue to rise.
- 68% of contractors report experiencing project delays, which are expected to continue into Quarter 2 of 2021.
- With pandemic-related delays, 71% of builders are struggling to meet schedule requirements, and 53% of contractors are experiencing major project shutdowns.
What Developers Can Do?
Use Industrialized Construction (IC) Methods
Industrialized Construction (IC) combines the best of prefabrication, automation, AI, factory robotics, and DfMA. The adoption of industrial, prefabricated, and manufacturing techniques is an emerging way to realize the efficiency gains so elusive in architecture, engineering, and construction.
Using IC methods, it’s possible to build for $100/sqft.
Focus on Multifamily Projects
While construction opportunities have not yet rebounded in most sectors, the multifamily market is coming back strong! Right now, small- and mid-sized cities have the best opportunities for multifamily project development.
Explore Space-Saving Avenues
Every square foot costs money. If you invest in multifamily buildings, there are some trends to help you smartly size your units for savings and efficiency. You can realize your most efficient designs using prefab methods. Watch a unit come together in this video:
We are helping multifamily developers across the country rethink the way buildings get built, so proformas are strong regardless of rising construction costs.
Check out our institution of higher education STONEPILEllc—The Online Construction College—where we continue to re-imagine better ways to build.