A recent National Association of Home Builders (NAHB) study shows that the average time to build a high-rise apartment building is 28 months. This is up from the 22 months it took to complete an apartment building in 2009. The study also found that the cost of incomplete construction projects rose from $80,000 to $85,000 per unit in 2013. Several factors contribute to the lengthening of completion times for high-rise apartments.
Difficulty In Acquiring Construction Loans
The recent financial crisis has profoundly impacted the real estate market. While the market has begun to recover, many banks have tightened their lending standards, making it harder for developers to get financing for their projects. This has made construction loans more difficult to obtain and has lengthened the time needed to secure financing.
As a result, the time needed to build a high-rise apartment has increased, and the number of completed projects has declined. While this may be a short-term problem, it is likely to have a long-term impact on the housing supply in major metropolitan areas. If funding remains challenging to obtain, it could lead to a shortage of new housing and an increase in prices.
The Rising Cost Of Construction Materials
The rising cost of construction materials due to Russia’s Invasion Of Ukraine is a major concern for developers building high-rise apartments. The price of steel, concrete and other materials has increased significantly in recent years, and there is no sign of relief in sight. As a result, developers are forced to either accept lower profit margins or pass the costs on to consumers in the form of higher prices.
Either way, the rising cost of construction materials will affect the time it takes to build a high-rise apartment. Steel must be ordered well in advance, and concrete must be poured and cured before it can be used. As a result, any delays in the construction process will likely result in even higher costs. For developers, the rising cost of construction materials is a major headache that will likely cause delays and additional costs.
Shortage Of Qualified Labor
A shortage of qualified labor will inevitably lead to delays in constructing a high-rise apartment building. The most obvious impact will be on the timelines for each project stage. With fewer workers available, completing the foundation, framing, and exterior finishes will take longer. This will, in turn, add months to the overall construction schedule. Additionally, the quality of the finished product may suffer if corners are cut to meet deadlines.
For example, rushed workers may not take the time to properly seal windows and doors, leading to air and water leaks. In short, a shortage of qualified labor will significantly impact the time and quality of a high-rise apartment building.
The NAHB study provides valuable insights into the current state of the apartment construction industry. While completion times have lengthened in recent years, this is largely due to factors beyond the control of developers and builders.
Despite these challenges, the NAHB study also found that there is still strong demand for apartments. Renters are increasingly looking for quality units in well-located areas, and developers are responding by starting new construction projects. However, with skilled labor in short supply and costs on the rise, it is clear that apartment construction will remain a challenging industry in the near future.