Construction Outlook Fall 2022 Material Costs Continue To Rise as Contractors See Growing Demand on the Horizon
Historical Construction Cost Changes Material/Category
Percentage Change in Producer Price Indexes and Employment Cost Indexes
% Change since July 2021 -10%
0
10%
20%
% Change since April 2022
Avg Yearly Change (2017-2020)
30%
Consumer Price Index
8.5%
2.5%
1.9%
New Nonresidential Building Construction
23.9%
6.2%
3.5%
New Office Building Construction
24.2%
6.2%
3.3%
New Industrial Building Construction
28.2%
7.6%
4.1%
Steel Mill Products
6.4%
4.6%
4.0%
Concrete Products
14.3%
4.8%
2.9%
Gypsum Products
16.3%
7.6%
1.0%
Architectural Coatings
26.9%
1.5%
3.9%
-14.2%
10.3%
Lumber and plywood
(7.7%)
Steel Pipe and Tube
23.1%
3.0%
5.8%
Construction Machinery
11.1%
1.7%
1.9%
Plastic Construction Products
22.4%
3.8%
3.3%
Flat Glass
6.9%
0.2%
1.8%
Source: Associated General Contractors of America
2.92 MIL
3.2%
3.5%
130,300
1.9%
Atlanta Total Nonfarm Employment
Atlanta Unemployment Rate
U.S. Unemployment Rate
Atlanta Construction Employment
Atlanta Construction Employment YoY Growth Source: Bureau of Labor Statistics
Material prices have continued to rise throughout 2022, doing little to assuage concerns for high construction prices. Concrete products prices rose 2.2% in July, while several goods such as steel mill products (-3.7%) and copper and brass (-9.7%) saw significant drops in July. As a whole, most materials and products have seen gradual price increases over the past year. The hiring and labor outlook is bullish according to the Associated General Contractors of America (AGC). 74% of firms surveyed plan to hire in 2022 and are expecting growth both in public projects (thanks to the Bipartisan Infrastructure Bill) as well as the private sector. Hiring is not as easy as it may seem however, as 83% of contractors report that they are having a difficult time filling roles, both salaried and hourly. One of the biggest challenges that construction professionals are facing in today’s landscape is lead time. Thanks to a combination of limited product availability, rising costs, and shipping delays, the timelines needed to acquire certain goods has risen exponentially in the past two years. Lincoln Property Company Senior Operations Manager Chris Lelle says that this has forced construction managers to get creative and resourceful to cut costs and complete projects. “The increasing lead times have forced the industry to implement unprecedented contingency plans to ensure projects deliver on schedule. Construction and Project managers need to focus on salvaging and reusing long lead items. This may include white boxing spaces to make equipment available,” Lelle says. Some examples of these lead time increases according to Lelle are electric panels (now 17-28 weeks, formerly 1-2 weeks), roofing materials (now 24-36 weeks, formerly 4-8 weeks, DDC and BAS components (now 8-16 weeks, formerly 0-4 weeks), and VFDs (now 24 weeks, formerly 0-2 weeks).
lpcsoutheast.com
CONSTRUCTION OUTLOOK / FALL 2022
L P C Project Management In The News
LPC Selected as Landlord Management to Oversee Buildout of Tyler Technologies’ IntelliCenter Office Lincoln Property Company has managed the IntelliCenter, a three-story, 150,127-square-foot office building located at 2530 Sever Road and Interstate 85 in Gwinnett County, on behalf of the landlord since 2019. Tyler Technologies, an international software company, has signed a lease for a new 62,635 square foot office. “Tyler is committed to the Atlanta metro area. We are thrilled to open our new office in unincorporated Lawrenceville as we begin to welcome many of our team members back to the office,” said Greg Savard, general manager for Tyler’s Civic Services business unit. “The new space is modern and comfortable, and we know our employees will enjoy the new office features. We’re excited to consolidate under one roof with room to grow our team. We expect to add more than 100 jobs to this office in the next five years.” Project Manager Stacey Gay oversaw the buildout, slated for completion in the summer of 2021.
LPC Southeast and TerraCap Announce Completion of HealthTrackRx’s Infectious Disease Laboratory at Cobb Corporate Center Lincoln Property Company Southeast (Lincoln) has completed a construction management assignment on a 3,200-square-foot laboratory and office space at Cobb Corporate Center in Marietta, Georgia, leased by HealthTrackRx. The space represents the first laboratory for the company outside of its headquarters in Denton, Texas. Project Manager Stacey Gay led Lincoln’s team, overseen by Senior Vice President Shane Froman, as it coordinated plans and schedules with general contractor Lexdyn, commercial architects Hughes Turner Phillips and engineers Gray & Postell, Inc. “We were ecstatic to work with our client TerraCap and its tenant HealthTrackRx in the delivery of the tenant’s first Metro Atlanta laboratory space,” said Lincoln Senior Vice President Shane Froman. “I am especially proud of the construction management team at Lincoln for bringing to fruition HealthTrackRx’s vision, despite the supply chain and procurement issues currently facing our industry.”
Recent Assignments
Meet the Team
Shane Froman Senior Vice PresidentMgmt Services sfroman@lpc.com Shane Froman is responsible for all property management services in Georgia. With over eighteen years in the commercial real estate industry, he leads the management division of Lincoln Property Company which consists of 13 million square feet of Office, Retail and Industrial assets.
Chris Lelle Senior Operations Manger clelle@lpc.com
David Gay Senior Construction Manager dgay@lpc.com
Stacey Gay Project Manager sgay@lpc.com
Jesse Kave Director of Engineering jkave@lpc.com
Chris Wakefield Senior Construction Manager cwakefield@lpc.com
Michelle Vaughn Senior Project Manager mivaughn@lpc.com
Spencer Papciak Research Manager 678.498.7676 spapciak@lpc.com
Lincoln Property Company Southeast 3405 Piedmont Road, Suite 450 Atlanta, GA 30305 404 266 7600
About LPC SE: Lincoln Property Southeast is a commercial real estate firm offering a comprehensive suite of value-added services for our clients. With our substantial local presence and history in the Southeast region, we are ideally situated to provide a superior service, which comes from knowing the goals and challenges faced by our clientele: tenants, investors, lenders and owners of commercial real estate. Our people and our philosophy are the key ingredients for Lincoln’s solid track record of success. The information contained herein has been obtained from the owner of the property or from a source deemed reliable. While Lincoln Property Company has no reason to doubt its accuracy, we do not guarantee it.
lpcsoutheast.com