Every year, the commercial construction industry looks a little bit different. From trends to forecasts to things completely disappearing, each year changes – and it is our job to stay on top of those changes. That is why most recently Lakewood Construction President, Nick Nykerk, attended the ABC (Associated Builders and Contractors) annual conference and our Vice President, Kyle Engbers, attended the annual CECO conference.
Each year – contractors meet to learn about the exact things listed above at various conferences and events. We want to share the most important things with you that our team learned so that you can be informed and decide the best decision for you and your business.
Here are the top 3 takeaways that you need to know.
1. Jump in Raw Material prices
If you are part of the building process, have been involved in a building project over the last two years, or have walked through your local lumberyard, you have seen the steady increase in steel and the uncertainty of wood prices. While the initial prediction was that steel would peak in 2021 and flatten out in 2022, the conflict in Ukraine and the strong building forecast in the United States has provided yet another curve ball for steel prices.
The Commodities Research Unit (CRU) has created an index that they utilize to track steel prices. In March of 2022, the CRU steel index had its largest single week jump of the last two years. The combination of an increase in steel prices, trucking shortages across the country, and high oil prices, brings another wild road ahead when it comes to raw material.
Lakewood’s Thoughts: If building now allows for business growth, do it. With no forecast of steel prices flattening and an extremely low inventory on the market, you may find yourself stuck on space if you wait for correction. While the lead times are manageable, upfront planning and early orders are key to getting ahead of price increases and staying on schedule.
2. Industrial Space is Low
We know how many of you are currently feeling this pain point. Your company is growing, and you need to expand, but where can you do that? Because of the supply chain issues over the last two years, work is coming back to the United States in an effort to fill in those gaps. This means industrial companies are continuing to grow and space is continuing to dwindle.
Lakewood’s Thoughts: The Quarter 1 update from Advantage Real Estate showed an extremely low current inventory of buildings on the market in the Grand Rapids area and projections show that trend continuing. Because of this, we have seen a large increase over the past two years in expansions of existing facilities. Clients are building additional warehousing so that they have the ability to order material in advance and store on-site.
3. Labor Shortage to Continue
While we have seen this coming for a few years, reports this year confirmed that roughly 50% of the trades work force is planning to retire in the next 10-15 years. This is going to cause an obvious impact on the construction industry as a whole.
Lakewood’s Thoughts: We are very excited for the recently opened West Michigan Construction Institute (WMCI). We know they will do great things for this pain point in the construction industry and bring in a great new talent pool of workers to all of our trades. Learn more about the West Michigan Construction Institute here.
We would love the opportunity to help you navigate this wild market and lay out solutions that work best for you and your business. Early conversations and planning lead to the best results – ready to get started?