Mika Majapuro MikaMajapuro

Construction costs are increasing rapidly. Some developers havesaid that total construction costs are up 30% over last year. A lotis contributing to the rising construction price tag, but a laborshortage and rising materials prices are among the biggest drivers.Now, trade tariffs on steel and lumber are putting more pressure onconstruction costs. While there is little developers can do to curbthese increases, implementing materials management technology isone way to offset it.

“The biggest problem is uncertainty. Some projects are done at afixed price, so you may be bidding on a project today but there isa multiple-months delay to construction,” MikaMajapuro, director of product management and strategy atTeletrac Navman, tells GlobeSt.com. “That is arisk window where you will not know what is going to happen to thematerials price. There are currently a lot of upward pressures onmaterials cost. If you combine other trends like labor shortagesand rising wages, there are a lot of pressures on developmentmargins, 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.