Mika Majapuro Mika Majapuro

Construction costs are increasing rapidly. Some developers have said that total construction costs are up 30% over last year. A lot is contributing to the rising construction price tag, but a labor shortage and rising materials prices are among the biggest drivers. Now, trade tariffs on steel and lumber are putting more pressure on construction costs. While there is little developers can do to curb these increases, implementing materials management technology is one way to offset it.

“The biggest problem is uncertainty. Some projects are done at a fixed price, so you may be bidding on a project today but there is a multiple-months delay to construction,” Mika Majapuro, director of product management and strategy at Teletrac Navman, tells GlobeSt.com. “That is a risk window where you will not know what is going to happen to the materials price. There are currently a lot of upward pressures on materials cost. If you combine other trends like labor shortages and rising wages, there are a lot of pressures on development margins, which are already thin to begin with.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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