By Mike Albanese
Special Contributor
- COVID, inflation, and labor shortages are noted as the main reasons for extended construction timelines.
Area multifamily developers say inflation, rising interest rates, labor shortages, and supply chain issues are dragging out construction timelines.
Data from the 2021 Survey of Construction from the Census Bureau revealed the average length of time to complete construction of a multifamily building rose to 17.5 months.
Sumner Billingsley,a partner at the Billingsley Company who is responsible for its multifamily portfolio, said a combination of material delays and labor shortages are causing projects to be extended.
“On average, we are seeing project delays of three to four months at present,” she said.
The Billingsley Company, which has four multifamily projects underway, said the biggest obstacle facing developers is a combination of many factors.
“Inflation has made it more important to do more value engineering to have a more competitive product,” Billingsley added.
‘Lock it in now.”
Bright Realty Development Manager Robert Evans echoed Billingsley’s concerns, saying the delays are becoming a common part of business.
“Everytime you turn around to get an approval, you’re getting a week or two delay,” Evans said.
Bright Realty developed a 312-unit apartment complex in Lewisville in 2020 and will break ground in August on a 364-unit complex.
While noting each project is unique, Evans said Bright Realty is seeing more challenges than in the past. He said COVID is causing staff shortages at the city level, which impacts the approval process.
Evans said the “fortunate part” is they recognized patterns and started to adjust how it conducts projects.
“We’re trying to mitigate risk we know we’re going to run into and getting ahead of things that may be issues,” he said.
Evans added that inflation has caused the price of projects to grow, noting 20 percent increases from when projects are priced compared to when they begin.
He added they are purchasing items, such as lumber, now their current price and not wanting to risk waiting on dealing with higher prices or shortages.
Evans added the message from contractors to developers is simple, “lock it in now.”
“It doesn’t seem like it’s sustainable,” he said.
National Trend
The Bureau of Labor Statistics reported in June that construction material prices were up 0.3 percent in the month, seasonally adjusted. The index was 15.1 percent higher year-over-year.
While both Bright Realty and the Billingsley Company are impacted locally, the Census’s survey found this is a national issue. Multifamily construction timelines were the longest in the Northeast at 19.8 months. The Midwest had the shortest timeline at 15.3 months.
Billingsley said the Dallas region has an advantage due to its “very dynamic economy.”
“I believe we will be slower to slide into recession and faster to come out of it,” she said.
