Tight Labor Market, Rising Costs Could Exacerbate Construction Delays In 2018
Strong development pipelines are expected to put more strain on an already tight construction labor market this year, which could potentially slow down the rate of project completions.
In the past year, developers have had an increasingly difficult time finding skilled construction workers, a phenomenon that was exacerbated by disasters including Hurricane Harvey and Irma. These events have also driven wages and costs of construction skyward, and are anticipated to put downward pressure on the timeline of commercial real estate projects in the coming year, CoStar reports.
This was particularly the case in the multifamily sector last year. Commercial real estate data and research firm Yardi Matrix expected 480,000 apartment units to come online in 2017, but construction labor woes stalled deliveries. Roughly 284,000 apartments delivered by year’s end, CBRE reports.
On the other hand, new tax breaks and impending financial deregulations could increase the speed at which projects are approved and completed. In a survey conducted by CoStar, almost 75% of the 1,000 construction firms surveyed said they expect to expand their payroll this year — meaning they may be able to meet expectations of the skilled workers needed to complete projects on time.