Beware: Construction Costs Rising Rapidly

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rising construction costsWith the cost of certain materials and skilled labor rising, Brian Sudduth, a senior vice president of Miller Construction Company, expect owners and developers will see a continual upward trend in construction costs.

Of course, that’s consistent with the trend in 2014—but that’s not all he’s predicting.

“More stringent building and energy codes will also add to higher project costs, which will require more due diligence in preconstruction to help analyze and select building components and mechanical systems,” Sudduth tells GlobeSt.com. “ A Florida Building Code revision is due in the coming year.”

As code requirements become more stringent, Sudduth says owners will see an increase in the upfront building cost as they implement items like insulated glass, LED lighting and high-efficiency mechanical systems to ensure compliance.  The good news is that in the long run these investments will lower operating costs and add to a building’s value.

“We anticipate that today’s robust South Florida construction demand will intensify in private and public sectors throughout 2015,” Sudduth says. “The Miami-Dade market is leading the way, especially in the residential condo market, which is spurring growth in retail and other markets.”

Institutional investors are back in South Florida markets in a big way, he continues, and their growing presence is just one factor boosting industrial construction. With the Port Tunnel open and PortMiami dredging underway as the Panama Canal’s expansion progresses, he says 2015 brings continuing demand for more efficient industrial space.

“On the public side, county and city governments with long-delayed projects are starting to spend,” Sudduth says. “That’s shifting the South Florida construction industry’s competitive landscape, where it seemed everyone was competing for every job.

In conclusion, Sudduth says, many contractors who traditionally specialized in public sector work are returning to that sector. He points to Broward’s $800 million school board bond issue voters approved in 2014, plus the $1.2 billion dollar bond Miami-Dade approved by in 2012 for the school board, as two factors that will have a major positive impact on the local industry.

 

Source: GlobeSt.

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