Advocacy, Design & Construction
Legislation and Construction Costs
By: Katie Roberts, Fiveash Stanley At the onset of the COVID-19 pandemic, it was impossible to understand the myriad of ways a microscopic virus would upend all facets of our lives, from working, to educating our children, to purchasing toilet paper. The pandemic disrupted our healthcare infrastructure, our waste collection, even global trade and shipping.
Supply Chain Challenges While some of these issues are resolved, a critical issue remains for the commercial real estate industry: the high cost and limited supply of essential construction materials. As has now been well reported, plant closures and production cutbacks at lumber mills around the country and in Canada are largely to blame for supply issues. On the demand side, people in lockdown suddenly decided to address home improvement projects or needed to properly convert their garage or sunroom to a home office or classroom. Or, with remote work options part of the mainstream, individuals opted to relocate altogether, causing a surge in the housing market and driving up demand for inventory. As it relates to commercial real estate, COVID-19 has ushered in a paradigm shift in workspace design. Rather than maximizing worker density or large collaborative spaces, the priority is now creating safe, resilient working environments. Changes in workspace design require materials though. Materials that are expensive and may be in short supply.
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Insight • Issue 3, 2021
Legislative Moves Recognizing the severity of the issue in Georgia, Speaker of the House David Ralston created the House Working Group on Rising Costs of Construction Materials in May. In announcing the group, the Speaker said, “we know that the rising costs of construction materials pose a threat to our continued economic recovery … [this] group will look into why these costs are increasing and recommend solution to alleviate the burden on those building for the future.” The working group held their first meeting on July 8. During the 5-hour discussion, the working group heard from representatives of the lumber and concrete industries, individual trades (plumbing, electrical, HVAC, general contractors, etc.) and the logistics and hauling industries. Members of the working group heard testimony that the price of lumber increased by 300% from spring 2020 to spring 2021, peaking at $1,515 per thousand board feet on May 28, 2021. Soaring lumber costs and construction materials have an obvious impact on the bottom line. Another major driver is the project’s timeline, particularly as it relates to plan review and inspection. Thanks to proactive work by BOMA and other industries, builders in Georgia have been well-situated during the pandemic. In 2019, the Association supported House Bill 493 to allow for private construction plan review and inspection of certain facilities after the local government failed to provide those services within thirty days. At that time, hospitals, nursing homes, jails, airports, and
