Construction largely survived and even thrived during the pandemic along the Gulf Coast last year, but rising construction commodity prices threaten to put a crimp on profit margins, hike rents and even postpone some projects in 2021.
The most notable commodity price increase has been for lumber, which surged more than 35% in the final weeks of 2020. That price hike, to more than $650 per thousand board, is especially worrisome to apartment developers because they rely increasingly on wood for so-called “stick-built” multifamily rental properties.
Current price increases could add thousands of dollars to the cost of a four-story, “garden-style” apartment complex — the type favored by most suburban multifamily rental developers, according to National Association of Home Builders data and projections.
But while lumber has seen the largest gains coming into 2021, construction experts say other materials are also rising amid continued growth throughout the state and the U.S.
Metals like copper and steel for re-enforced concrete and steel cable have risen dramatically or are poised to do so with early 2021 orders, builders say.
“The cost of steel is up by 35% over the last 45 days,” Nick Sanfilippo, senior vice president of project management for Tampa-based Franklin Street, a commercial real estate and financial services firm, says during a mid-December webinar.
“It’s been a massive increase.”
