Construction costs are continuing to climb. Last year alone, construction pricing increased 5.07%. Materials costs and a labor shortage are the main driver of the rising pricing, and they are likely to fuel another increase in costs this year.

“Both material and skilled labor costs in construction have been on the rise for some time, and today's multifamily developers are seeking cost-effective ways to bring multi-unit projects to fruition,” Richard Lara, president and CEO of RAAM Construction, tells GlobeSt.com.

The labor shortage had been the major challenge for contractors and developers, but recently, increased materials cost has been an equal burden. “In 2018, material costs increased 10% over the previous year, with the price of crude petroleum rising by 49%, iron and steel up 14%, and softwood lumber jumping 23% from the year before,” says Lara. “Causes include a scarcity of resources caused by natural disasters and a rise in construction activity nationwide.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.