Construction costs arecontinuing to climb. Last year alone, construction pricingincreased 5.07%. Materials costs and a labor shortage are the maindriver of the rising pricing, and they are likely to fuel anotherincrease in costs this year.

“Both material and skilled labor costs in construction have beenon the rise for some time, and today's multifamily developers areseeking cost-effective ways to bring multi-unit projects tofruition,” Richard Lara, president and CEO ofRAAM Construction, tells GlobeSt.com.

The labor shortage had been the major challenge for contractorsand developers, but recently, increased materials cost has been anequal burden. “In 2018, material costs increased 10% over theprevious year, with the price of crude petroleum rising by 49%,iron and steel up 14%, and softwood lumber jumping 23% from theyear before,” says Lara. “Causes include a scarcity of resourcescaused by natural disasters and a rise in construction activitynationwide.”

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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.