The war in Ukraine, global port congestion, and the persistent spread of COVID variants will conspire to raise prices on equipment and key building products by 7-9 percent this year, according to the general contractor Consigli’s latest market update, which it released a few days ago.
Authors Peter Capone and Jared Lachapelle, Consigli’s director of construction and vice president of preconstruction, respectively, wrote that while the nonresidential construction industry continues to be resilient, it can’t completely alleviate forces that are reducing or delaying the supply of raw materials and finished goods.
Russia’s invasion of Ukraine has reduced the supply of manufacturing materials such as aluminum and copper, and is putting a strain on production and delivery across Europe. Meanwhile shipping congestion “is showing little sign of improvement” worldwide, especially at ports in Asia.
Other factors contributing to rising construction prices include spikes in fuel costs, and wage increases that are jacking up labor costs. “Acquiring workforce, [in] the Northeast in particular, remains an area of concern,” the authors state. Union and non-union subcontractors “are booking up to capacity for 2022,” and are already focused on next year and beyond.
Electrical equipment and hardware, and roofing materials, are stalled in long lead times. As a result, price inflation for these products is expected to be double digit this year.
Consigli is also keeping an eye on a few things that could affect prices, such as contract negotiations with the International Longshoreman Warehouse Union that are scheduled for this July and will impact 22,000 workers at 79 ports.
The federal infrastructure bill, as it rolls out, will place more stress on an already tight labor market. Consigli notes that half of its larger subcontractors have secured 85 percent of their backlog for this year, and are “quickly filling” their projected backlog for 2023.
Related Stories
Multifamily Housing | Jan 15, 2024
Multifamily rent growth rate unchanged at 0.3%
The National Multifamily Report by Yardi Matrix highlights the highs and lows of the multifamily market in 2023. Despite strong demand, rent growth remained unchanged at 0.3 percent.
Self-Storage Facilities | Jan 5, 2024
The state of self-storage in early 2024
As the housing market cools down, storage facilities suffer from lower occupancy and falling rates, according to the December 2023 Yardi Matrix National Self Storage Report.
Designers | Dec 25, 2023
Redefining the workplace is a central theme in Gensler’s latest Design Report
The firm identifies eight mega trends that mostly stress human connections.
Contractors | Dec 12, 2023
The average U.S. contractor has 8.5 months worth of construction work in the pipeline, as of November 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator inched up to 8.5 months in November from 8.4 months in October, according to an ABC member survey conducted Nov. 20 to Dec. 4. The reading is down 0.7 months from November 2022.
Market Data | Nov 27, 2023
Number of employees returning to the office varies significantly by city
While the return-to-the-office trend is felt across the country, the percentage of employees moving back to their offices varies significantly according to geography, according to Eptura’s Q3 Workplace Index.
Market Data | Nov 14, 2023
The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of September 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.4 months in October from 9.0 months in September, according to an ABC member survey conducted from Oct. 19 to Nov. 2. The reading is down 0.4 months from October 2022. Backlog now stands at its lowest level since the first quarter of 2022.
Multifamily Housing | Nov 9, 2023
Multifamily project completions forecast to slow starting 2026
Yardi Matrix has released its Q4 2023 Multifamily Supply Forecast, emphasizing a short-term spike and plateau of new construction.
Contractors | Nov 1, 2023
Nonresidential construction spending increases for the 16th straight month, in September 2023
National nonresidential construction spending increased 0.3% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.1 trillion.
Market Data | Oct 23, 2023
New data finds that the majority of renters are cost-burdened
The most recent data derived from the 2022 Census American Community Survey reveals that the proportion of American renters facing housing cost burdens has reached its highest point since 2012, undoing the progress made in the ten years leading up to the pandemic.
Contractors | Oct 19, 2023
Crane Index indicates slowing private-sector construction
Private-sector construction in major North American cities is slowing, according to the latest RLB Crane Index. The number of tower cranes in use declined 10% since the first quarter of 2023. The index, compiled by consulting firm Rider Levett Bucknall (RLB), found that only two of 14 cities—Boston and Toronto—saw increased crane counts.