Is now the time to restart my pre-Covid Project?
The short answer is yes, if you can. After a couple years of Covid-19 related delays and cancellations the world has finally gone back to work. However what remains is higher construction costs and far longer lead times. So if you had a project and it was put on hold, is it a good time to re-start your pre-covid project or should you wait?
As you can imagine the cost of construction is high. The U.S. Bureau of Labor Statistics tracks everything from labour to construction costs to specific commodities. The list goes on but an enlightening piece of information is the Special Cost Index for overall Construction Materials.
A building is never one material, one item, one supplier. A building is a series of materials sometimes overlaid like a paint, sometimes joined like wood or metal and concrete. A good indices of overall costs is this overall Special index. Sure one material might be on the up and another on the way down but the overall trend is the one to really think about.
Since the 1950s construction material costs have been rising, as has the cost of labour. So is there ever a “great time” to start… Yes – when the cost to borrow to invest in these materials is low. Like right now.
The cost to borrow money seems poised to rise but now is a good time to get the money you need to start and lock in costs for your project. A good hedge for escalating costs is to lock in material pricing with suppliers.
Restarting Your Pre-Covid Project
A company like OpenAire starts with larger upfront deposits to do just that. By starting a new or pre-covid project and putting down a larger deposit you can “lock in” the price of materials at current rates and hedge cost of escalation. It is a bet, indeed, but with the trends on the up you are now at “Current rates” and in line for materials.
But what if prices drop? Well thats the bet and at best, a moderate drop in the individual price of one material, actually won’t impact your construction costs. The overlap of multiple materials and items is simply too great.
The delays in construction schedules we are seeing right now, means that even if one commodity drops in price you are still holding onto a property with nothing happening. Real estate isn’t dropping and utilities are also on the rise. So if you are not planning to jump ship and bail on the entire thing, now is the time to get in “line” so you have a chance of seeing something sometime next year.
At this point, in February of 2022… if you have a pre-covid project or new project starting, you likely won’t see anything until 2023. Depending on the size of the project, that might actually be 2024. So you need to factor in the cost of delays and simple scheduling. Projects take time, and now that time is at its peak.
All manufacturers are now booking a few years out, after the Covid-19 slowdowns, it appears the construction market is back. While this is an exciting time, there remains an element of hesitation. However, as the world looks to demote Covid-19 to an endemic disease, economies, businesses and investors are looking to get back on track and plan for the future.
A few tactics to consider include planning a project in phases with consideration for lower maintenance structures and buildings that cost less to operate. Also, and importantly, buildings that are helpful in ensuring the next time an air borne virus takes over, that your space is naturally ventilated and able to handle people in volume safely.
Start now with the plan to grow. A system like OpenAire allows for expansion and natural ventilation through operable walls and roofs. Literally we can take off an end wall and make your space bigger down the road.
Or if you are looking to renovate your existing space, we can rip off old walls and roofs and replace them with new. Open roofs and walls allow theses spaces to operate even during a pandemic like what we have seen the past two years.
So if you have a project and access to funding, it is Go Time!