Construction Costs in Focus

The industrial asset class continues to be a driving force in commercial real estate, boosted by consumer demand and supply chain evolution. However, construction costs are providing significant headwinds to a sector seemingly unphased by the pandemic.

Pandemic induced shutdowns, natural disasters, and trade route disruptions have driven up material costs for key components for new building construction. The price of both domestic and foreign steel has increased significantly, 160%, and 80% year over year. Lumber pricing has also jumped, up 73% YOY as consumers took on more home improvement projects during the pandemic. Brass & copper have seen increases as well.

That’s not all. Many believe that labor - not material - will be the biggest challenge in the year to come. There is expected demand for 430,000 construction laborers in 2021. With a potentially administration-defining infrastructure bill headed to Congress in the coming months, labor will be a hot commodity, driving up costs further. All of these factors should be taken into account for industrial users looking for new construction product.

Related blog posts

Jackie Dunckley
Blog
June 14, 2021

Jackie Dunckley, SVP and Chief Talent Officer at OnPoint Community Credit Union

On this week’s podcast, Jackie Dunckley, SVP and Chief Talent Officer at OnPoint Community Credit Union shares her unique work history experience, including employment litigation and working in several industries including newspapers, biotech, and financial services. She brings tremendous value to leadership and serves as a real advocate for employees, all the while continuing to influence those around her with her community involvement.
Craig Zodikoff
Blog
June 8, 2021

Cresa employee spotlight: Craig Zodikoff, Managing Principal

Craig Zodikoff is a Managing Principal of Cresa’s Bay Area Offices. With over 23 years of experience, Craig has focused primarily on global and national portfolio clients, as well as on significant local work in a variety of industries. He has been with Cresa for 11 years.