Despite A Strong Market, Dallas CRE Is Feeling The Strain Of Material Delays. Planning Ahead Can Help

In the past decade, the Dallas-Forth Worth region has experienced a nearly 20% growth rate, and reports show that there is still ample room for more commercial real estate development.

While this is good news for the region, new construction doesn’t come without its challenges. This has been especially true in 2022, when increasing material costs due to inflation, supply shortages and delays have become a common occurrence.

Despite this, the Dallas construction market has been faring better than other U.S. markets due to the influx of companies moving to the region, said Kyle Whitesell, executive vice president of Texas-based general contracting company Bob Moore Construction.

“We’re seeing a healthy labor market in North Texas, and that’s going to bolster us better than a lot of other markets,” he said. “I believe we’ll have a slight slowdown depending on what the construction economy will look like over the next couple of years, but we’re in a fortunate area.”

Bob Moore Construction conducted a soon-to-be-published market research campaign that surveys CRE professionals’ perspectives on how the Dallas market has performed throughout this past year and asks what the future of the industry holds moving into the rest of 2022 and 2023.

The campaign found that 75% of respondents felt either “somewhat positive” or “very positive” about the state of Dallas construction. The 9% of people who indicated having a negative perception of the market cited reasons such as project delays and rising materials prices.

“Materials are escalating, and in some cases, building materials have been very difficult to get or have long lead times, especially with concrete, steel and electrical equipment,” Whitesell said. “This equipment is in such high demand that it has required us to revisit the schedule and how to work around a product that’s not coming when it’s needed.”

He recommended CRE project stakeholders take a proactive approach to procurement, ordering materials long before construction begins.

“It’s a constantly moving situation because some materials were impossible to get a year ago, and then, six months later, they’re available again, so we’ve had to constantly monitor different building materials,” Whitesell said. “We’re always checking in with subcontractors and material suppliers about what the current projections are for when materials need to be delivered, so we can notify the client as to how it will affect the overall schedule.”

Developers, like VanTrust Real Estate, which works with Bob Moore Construction on Dallas-based projects, are also feeling the brunt of these challenges. 

VanTrust Real Estate Director of Development Services Tyler Chapman said that despite North Texas being “one of the fastest-growing areas in the country," deals are still being impacted by rising materials prices. Additionally, increasing interest rates are likely to impact the market for the rest of 2022 and into 2023.

“There are still deals and great opportunities out there, but they’re becoming few and far between,” Chapman said. “By getting creative with the way we deliver buildings, we can capitalize on those deals.”

Chapman said that working with Bob Moore Construction helped VanTrust Real Estate plan ahead. 

“We bring Bob Moore Construction on early to help with budgeting and design, and to ensure that we’re getting the right building within the market,” Chapman said. “Rather than reacting to what’s going on in the market, they’re always looking ahead and providing solutions to help us deliver these buildings the best we can.”

Chapman said that VanTrust Real Estate is ready to work with Bob Moore Construction to embrace new opportunities in the Dallas region.

“Despite industry challenges, there are opportunities for companies like Bob Moore Construction and VanTrust Real Estate to shine and really prove their worth as contractors and developers,” Chapman said.

This article was produced in collaboration between Studio B and Bob Moore Construction. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.