Months after local regulations allowed building industry to reopen, multifamily and mixed use construction sites are still suffering from delays and shortages of building materials, finishes, appliances, and other fixtures.
In a recent survey, National Multifamily Housing Council found that from lumber and steel to electrical fixtures and plumbing, the supply chain in the US is nowhere near its pre-covid operation levels. Restrictions that are still in place for other industry sectors, such as permitting, zoning, professional services, international trade and logistics, are inhibiting the supply of materials, even though many of the developers are ready to continue working. Many, but not all, that is: the same study found that about half of real estate developers had to pause or delay work on their projects due to pandemic-related economic uncertainty, as well as access to financing for their construction projects.
Around 80% of participants did state that their work has been affected by material shortages, and even more said they saw prices for materials rise significantly in the recent months. This is a huge increase compared to last year, and pretty much any other period in the past decade.
Mega Supply Pro sourced building materials and fixtures for this multifamily project by Aviron Partners during the pandemic without delays or major price increases.
National Association of Home Builders reports that lumber prices went up by more than 170% in the past 10 months. And according to Steel Market Update the steel prices have hit record highs this January due to its short supply. It’s reasonable to expect that GCs and builders will inevitably be forced to pass higher cost of materials to developers, which will increase prices for homes at the end of the food chain.
Another side of how the pandemic is affecting prices is the significant in crease in competition contractors face for each project, which is itself a result of the construction industry bleeding jobs at a high rate, according to the Bureau of Labor Statistics. Just a few months ago in the summer the projections for CRE industry were pointing at construction prices actually going down, but developers apprehensive of supply bottlenecks decided to order materials months in advance and all at the same time, which in itself created another bottleneck – now manufacturers are overloaded while still not working at full capacity, and ports are seeing vast armadas of freight ships scattered around the bays waiting for weeks to be unloaded.
The pandemic had painfully emphasized the fact that many construction firms were too reliant on real-time transatlantic manufacturing and imports. We believe it’s time developers diversify their sourcing models, and shift away from oversea imports – these businesses will be better positioned to minimize supply chain issues going forward.
At Mega Supply Pro we recognize that businesses can’t diversify their suppliers overnight, but we believe this trend will continue for the foreseeable future. Our model allows us to avoid delays and shortages; we’re prepared to fill this niche while working towards strengthening the local industrial sector as builders and developers explore domestic options.
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Mega Supply Pro is a manufacturer-direct wholesaler of construction materials and finishes, acting as your one-stop-shop for direct procurement and timely delivery of building supplies, appliances, fixtures, etc. Let us handle sourcing, scheduling, and deliveries of construction materials, at no extra cost. Contact us to discuss your project or to get a quote.