chi-High Rise Under Construction

|

CHICAGO—@properties has just released its latest annual developmentmarket report, for which it completed almost 100 surveys withdevelopers, bankers, architects, contractors and its owndevelopers. In addition to analyzing trends in neighborhoods suchas River North, the Gold Coast, the South Loop and others, the realestate brokerage firm asked its respondents to identify theprincipal risks for residential for-sale development in Chicagothis year.

|

“This is the most comprehensive@report we've ever assembled, and the best thing is that the mostimportant insights are coming directly from the people who aredesigning, building, financing and selling new, for-saleconstruction in Chicago,” says Michael Golden, co-founder of @properties, the city's largestbrokerage by market share. “It's not just an analysis of the marketfrom 30,000 feet. It's people from all sectors of the industrysaying, 'Here's what we're dealing with. Here are the bigchallenges and the big opportunities.'”

|

When asked to name the top threeconcerns, the one that was considered the most worrisome was risingconstruction costs. Those costs have been increasing for a fewyears, and 2016 is not likely to provide any relief. “Generalcontractors responding to our construction survey were unanimous inforecasting 1% to 5% growth in the overall cost of condo/apartmentconstruction for 2016,” according to the report.

|

And even though a global slowdownmay curb increases in the cost of materials, a skilled laborshortage will probably keep pushing up labor costs. Mostrespondents trace this shortage to the mass exodus of workers fromthe construction industry after the financial collapse of 2008.Many had found other occupations by the time the demand for newconstruction returned.

|

“It has been estimated that 25% ofconstruction workers left the industry over the past eight years,and fewer young people are entering the trades,” saysRoryTihinen, vice president ofpre-construction at Leopardo Cos., Inc. “Labor shortages in the skilled trades,particularly in vertical cast in place concrete, precast concrete,rebar and glass, are affecting projects most, with precast leadtimes nearing 20-year highs.”

|

Robots that can handleconstruction don't seem likely anytime soon, so the surveyrespondents came up with a low-tech solution. They advised gettingyour general contractor involved early in any new developmentprocess. The feeling was that when contractors are part of meetingswith architects, marketers, designers, and developers, the wholeprocess should proceed with far greater efficiency.

|

“Engaging a sophisticatedcontractor early in the planning stages, lowers risks, saves timeand money, and stretches construction dollars in so many ways,”says Tihinen. “Most important, it identifies accurate, guaranteedconstruction costs, and schedules far sooner than traditionallypossible.”

|

chi-High Rise Under Construction

|

CHICAGO—@properties has just released its latest annual developmentmarket report, for which it completed almost 100 surveys withdevelopers, bankers, architects, contractors and its owndevelopers. In addition to analyzing trends in neighborhoods suchas River North, the Gold Coast, the South Loop and others, the realestate brokerage firm asked its respondents to identify theprincipal risks for residential for-sale development in Chicagothis year.

|

“This is the most comprehensive@report we've ever assembled, and the best thing is that the mostimportant insights are coming directly from the people who aredesigning, building, financing and selling new, for-saleconstruction in Chicago,” says Michael Golden, co-founder of @properties, the city's largestbrokerage by market share. “It's not just an analysis of the marketfrom 30,000 feet. It's people from all sectors of the industrysaying, 'Here's what we're dealing with. Here are the bigchallenges and the big opportunities.'”

|

When asked to name the top threeconcerns, the one that was considered the most worrisome was risingconstruction costs. Those costs have been increasing for a fewyears, and 2016 is not likely to provide any relief. “Generalcontractors responding to our construction survey were unanimous inforecasting 1% to 5% growth in the overall cost of condo/apartmentconstruction for 2016,” according to the report.

|

And even though a global slowdownmay curb increases in the cost of materials, a skilled laborshortage will probably keep pushing up labor costs. Mostrespondents trace this shortage to the mass exodus of workers fromthe construction industry after the financial collapse of 2008.Many had found other occupations by the time the demand for newconstruction returned.

|

“It has been estimated that 25% ofconstruction workers left the industry over the past eight years,and fewer young people are entering the trades,” saysRoryTihinen, vice president ofpre-construction at Leopardo Cos., Inc. “Labor shortages in the skilled trades,particularly in vertical cast in place concrete, precast concrete,rebar and glass, are affecting projects most, with precast leadtimes nearing 20-year highs.”

|

Robots that can handleconstruction don't seem likely anytime soon, so the surveyrespondents came up with a low-tech solution. They advised gettingyour general contractor involved early in any new developmentprocess. The feeling was that when contractors are part of meetingswith architects, marketers, designers, and developers, the wholeprocess should proceed with far greater efficiency.

|

“Engaging a sophisticatedcontractor early in the planning stages, lowers risks, saves timeand money, and stretches construction dollars in so many ways,”says Tihinen. “Most important, it identifies accurate, guaranteedconstruction costs, and schedules far sooner than traditionallypossible.”

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.

brianjrogal

Just another ALM site