Short Supply, Tall Order

From Pittsburgh Business Times:

DEVELOPERS AND BUILDERS ARE DEALING WITH OFTEN "INSANE" PRICE INCREASES ALONG WITH DELAYS AND SUPPLY CHAIN ISSUES.

If there’s any doubt about how concerns over the issue of inflation are influencing construction and development in the region, just listen to a local executive from one of the busiest developers in western Pennsylvania.

Brandon Snyder, market leader of the Pittsburgh office of Cincinnati-based Al. Neyer, knows firsthand about the rising construction material costs. Al. Neyer is actively building its own industrial projects across the region, and it’s also the builder for a major apartment development near the Whole Foods Market in East Liberty.

“The steel market has been insane,” Snyder said in a recent NAIOP panel discussion at the Rivers Club, noting increasing steel costs in particular. “It’s hard to make sense of it.”

He added: “And it’s not just the cost. It’s the delivery schedule. Eight to 10 weeks lead time is now 36 to 40.”

PANDEMIC PRICE DISRUPTION

So it goes in the development and construction business coming out of a pandemic.

“I truly haven’t seen price disruption like this in the last 30 years,” said Bill Gatti, president and CEO of Trek Development Group, which is working to start construction on a new apartment project at the Garden Theater block on the North Side as material prices are skyrocketing. “It’s an unusual time.”

The worst of the pandemic disruptions that lasted nearly 15 months may be receding, but Covid-19 continues to leave plenty of booby traps behind.

Supply shortages for everything from steel to lumber to labor have mixed with dramatic price increases that are making the topic of inflation an unavoidable subject. All of this is wreaking havoc on construction companies looking to build.

Read more from the article here.