Paula Munger, the National Apartment Association’s Director of Industry Research & Analysis, shares some insights on rising construction costs she’s gleaned from apartment developers around the country. The cost of labor is particularly acute:
According to a recent survey of nearly 1,500 contractors by the Associated General Contractors of America, 69% reported difficulty filling hourly craft positions, particularly carpenters, electricians, roofers and plumbers. Not surprisingly, 48% of survey respondents reported increasing base pay in order to attract these skilled workers. Over half of the contractors do not expect any relief over the next 12 months, so if classic supply and demand fundamentals play out as they should, expect labor costs in the construction industry to continue to rise. Of course, that all depends on which market you’re in…
So let’s get local, and take a closer look at labor costs, specifically median hourly wages for construction workers in some major metropolitan areas as of 2015 (the most recent data available). Seventy percent of the top 10 apartment markets, based on number of units, exhibited wage premiums in construction compared to other industries. In Chicago, a construction worker can earn almost double the overall average earning rate, with New York and Los Angeles about a third more.
Read her full write-up here.