Labor Shortages Create Apartment Construction Delays
Labor shortages for skilled workers is being blamed for the increase in apartment construction delays. According to a Costar consultant, the average construction delay is approximately 5 months, up from 3 months in 2017.
The shortage in skilled labor is driving up the cost of construction more quickly than inflation. Apartment developers are willing to pay the additional costs. Construction delays result in lost income and greater construction loan interest expense.
Experts attribute the slow rise in apartment vacancy rates to the labor shortage. Developers and construction managers are required to keep a good relationship with their sub-contractors to ensure they continue to show up for work. In lieu of the labor shortage, some developers are offering bonuses for employees who work a full week.
Bullpen Summary:- A lack of skilled laborers has resulted in construction delays across the apartment industry.
- The average construction delay per project is currently 5 months, up from 3 months in 2017.
- Low supply of skilled laborers has driven up the cost of apartment construction.
- Underwriters and analysts should consider this additional construction time when evaluating their deal