Construction Economic and Financial Update
Columbus, OH has grown 12.20% from 2010-2020, making it the fastest growing city in the Midwest. In November 2021, new construction in central Ohio was valued at $5.8 billion dollars. Despite the COVID-19 pandemic, commercial real estate prices have touched new highs in 2021.
Over the next three years, experts foresee compound annual growth across almost all construction segments, particularly, water supply, S&WD and transportation. Construction costs have increased 7.42% from 2020 to 2021 due to the labor shortages and supply chain issues that the construction industry has encountered.
Construction Workforce Issues
Construction job postings are up 43%, and the demand continues to increase faster than growth in the workforce. That degree of inflation has created an artificial gap between the percentage of jobs requiring an undergraduate degree, and the percentage of current workers with an undergraduate degree.
While construction employment in the US fell sharply in 2020, due to the pandemic, construction and mining employment in central Ohio was able to remain steady in 2020, and is predicted to increase in 2022.
Construction Cost Overview
From April 2020 to November 2021, inputs to construction are up 29%. However, bid-prices from April 2020 to November 2021 for new non-residential construction, are only up 13%.
Commodities, including steel and lumber, are returning to pre-pandemic levels. Expect non-residential buildings inflation to range between 3.2% and 3.7%, with potential to be held lower. Residential work should expect inflation between 7-8% with potential to push slightly higher. Overall inflation projection for 2022 is 3.0%.
The Federal Reserve shows that banks are flush with liquidity. Additionally, cash flow for residential projects is up 7.7% in 2022, and 2.2% for non-residential projects.
Our construction experts at Rea & Associates are here to educate your company on the unique challenges of the construction and commercial real estate industries in 2022. Contact one of our experts to learn more about success in a post-pandemic world.