CHICAGO—Builders throughout much of the nation struggled with higher construction costs in 2017. And many agree that an acute shortage of skilled labor was the chief culprit. The overall outlook for commercial real estate in 2018 remains positive, but that shortage will continue posing a threat to further growth.

“The cost of construction has risen significantly, even compared to pre-downturn levels,” Chuck Taylor, director of operations for Lemont, IL-based Englewood Construction, tells GlobeSt.com. To keep its construction projects on schedule, the company has been using large-scale subcontractors on some job sites, even ones from hundreds of miles away, as many smaller, local operators are overcommitted. Not all firms have this capability, however, and “that forces many projects into overtime situations.”

Although these concerns are national in scope, not every region faces the same difficulties. “In Chicago we don't have as much of an issue,” Taylor says. “But in many areas, such as Detroit, they have never recouped the manpower lost in the downturn.” The problem developed in that era after many skilled craftspeople, especially the older, more experienced ones, retired as new construction ground to a halt.