Scheduling also becomes challenging. The bid process may require shorter lead times, while material back-orders extend schedules. Pre-ordering and securing construction materials may become necessary to meet deadlines.
Building supply costs are just one price consideration in the overall cost of construction. Another refrain from construction companies is the shortage of skilled and unskilled labor. As unemployment benefits begin to run out, the labor supply is expected to increase. While this may have some impact, wages are also expected to increase as the labor supply struggles to meet demand.
The pandemic has also impacted the labor market in extraordinary ways. Health and safety rules have limited the number of people allowed on a job site or within a confined work area. Work reductions in government offices have slowed the rate of inspections and permit approvals.
Interest rates have remained the one constant. And while historically low rates will eventually rise, they are expected to do so at a slow rate. However, commercial financing and construction loans are not just based on interest rates. In recent years the architecture of these loans has changed significantly from long-term lending to shorter bridge loans throughout various phases of a project.
As construction booms and resources tighten, smaller projects may get pushed aside by large construction companies. Finding a smaller, yet experienced company may be the right answer for many. Omnia Pacific Construction, a Los Angeles based company specializing in retail and commercial projects, is seeing an uptick in small and mid-level construction. Space conversion, remodeling, and ADA remediation are popular requests.
Another area growing in popularity is space demising. As commercial properties evolve, many larger spaces are looking to demise rooms into smaller, multiple rental units. These projects are perfect for a small construction company, as they require industry experience and expertise but are often too small for the bigger firms.
It is clear that commercial construction is entering a new phase. As labor and supply resources tighten in the months ahead, finding the right construction resources might be essential to complete your project in a timely and cost-effective manner. Tapping into new sources might pleasantly surprise you with the best possible outcome.
Construction Material Costs Overall Continue Rise, While Lumber Drops; Floor Daily
Material Cost Escalation, Delays and COVID-19: Managing Risk in Challenging Times; JD Supra
Covid to Impact Construction Claims Until at Least 2023; Pinsent Masons