News & Events

June 2017 – Newsletter – Construction Challenges in 2017

During a recent NMHC Board of Directors meeting, a panel of experts focused on some of the challenges that are facing the construction industry in 2017. By and large, they are the same issues facing us all in the industry and are being felt across the nation in all markets large and small. Here are the top two…..
 

Labor

 
In some markets, apartment builders have real difficulty finding the necessary tradesmen to complete building projects. Labor shortages, especially for key trades, are leading to project delays and cost overruns.
 

According to Government reports, the number of unemployed construction workers shrunk from 2 million in 2010 to approximately 700,000 in 2016; as a result, construction firms are not only having trouble filling key positions but also paying higher wages. A recent survey from August 2016 showed 69 percent of respondent firms reporting trouble filling craft positions, especially carpenters and electricians.
 

Developers and builders are responding by not only paying more but also by providing more attractive incentives and bonuses, increasing benefits, investing in more training and providing more overtime pay. But that’s not enough, it’s also working with school districts and labor development agencies to restore and modernize vocational education programs.
 

Wood

 
Wood has long been the framing material of choice for low-rise and mid-rise buildings up to four and five stories. New advancements in wood construction and changes in building codes are allowing builders to build taller, denser buildings with wood. However, destructive fires at several apartment construction sites across the country have caught the attention of policymakers, fire marshals, competing construction material producers and the mainstream media, who are questioning the safety of wood framing.
 

Because the issue is gaining legislative and regulatory traction, there is growing industry concern that the end result could be even more stringent building and fire codes or even bans on wood construction of four stories or higher. Such bans could effectively take us back 25 years to garden-style buildings with surface parking lots. Multifamily developers and builders are quick to point out that new height restrictions on wood-framed buildings would drastically reduce density and ultimately raise costs for the developer/builder and residents. As an example, a typical five-over-two podium, Type III construction yields between 150 and 225 units per acre compared with just 20 to 40 units per acre on a three-story walk-up Type V construction. Moreover, switching from wood framing to metal composite or all concrete would send costs per square foot up $25 to $30 per square foot and increase the total cost per unit by as much as $25,000 or $30,000.