Renovation Projects Face Serious Supply Chain Management Issues

Planning 90 days in advance is recommended, and having flexibility in brands, colors, recommended by leading supplier, say panelists at National Apartment Association’s Apartmentalize Conference in Chicago.

CHICAGO—Supply-chain management issues have a firm grip on the apartment renovation business as operators and suppliers struggle to deal with item shortages and rising prices. Circumstances and solutions and other trends were discussed Tuesday at National Apartment Association’s Apartmentalize Conference in Chicago.

John Kirchmann, Executive Vice President & Chief Financial Officer at Centerspace, said when development companies begin “hoarding” supplies, the supply shortage only worsens. “But the show must go on,” he said. “We have to be more flexible in terms of brands and colors, and find multiple suppliers to do business with.”

Kory Davis, Senior Director of National Accounts, Lowe’s Pro MSH, said things have come a long way since last spring when appliance and supply providers were “loaded” with items due to renovations being halted during pandemic lockdowns and uncertainties.

“The apartment industry needs to realize that we’re not choosing not to do business with you,” Davis said. “The supply chain management issue is global. It’s affecting every industry. Our recommendation is to plan early. You need to order your “must-have” products 90 days in advance. And you need to be flexible with brands and colors – or items such as faucets.”

Davis said he’s seeing larger apartment companies pre-buying in bulk up to $1 million in merchandise. He said he can’t forecast for inflation, but that he doesn’t see rising prices slowing this year – especially on items such as Freon, water heaters and appliances.

As an aside, Kirchmann said months ago he renovated some of his common areas, “but we’re still waiting for the pool table that we ordered to show up.”

John Tetreau, Director of Construction, Multifamily Commercial Construction, said his company has taken the step to lease nearby warehouse space to store supplies purchased for the future.

Kirchmann and Tetreau said that rents rising in many markets are helping to offset the rising materials prices, to some degree. “We are re-evaluating all of our projects on a quarterly basis,” Kirchmann said. “If they no longer make sense, we back off, or slow down.”

Tetreau said he evaluates his projects every 30 days and that “surprisingly,” the higher rents he’s getting are beating his expectations.

Work-From-Home Space Lukewarm for Now

As far as projects that are getting done, Kirchmann said designing for “work-from-home” spaces in new developments is showing up more often in plans he’s looked at “but the residents aren’t using them; I think it’s too early to tell if this is something they are going to want.”

Tetreau said the work-from-space adjustments he’s doing involve modifying and highlighting “weird little corners” in apartment homes that could be used while working from home.

“These days, everyone does all their work on a laptop or their phone, so an office space might not be the answer,” Tetreau said.

Check back with GlobeSt.com for more live coverage from this event.