The continued robust demand for industrial construction in North American has driven up overall costs and material lead times. The construction industry is still feeling the lingering effects of the pandemic.
The industrial sector has been a big winner in the wake of the pandemic. The explosion of e-commerce demand, the focus of improving supply chains, and the increased pursuit of onshore manufacturing have driven industrial demand over the past three years. The significant increases in interest rates have also added upward pressure to costs.
A recent survey by Cushman & Wakefield of construction contractors show that most expect challenges with project timelines, although the sentiment has improved marginally from a year ago:
- 66% expect slight increases in material lead times (up from 36% a year ago)
- 19% expect significant increases in material lead times (down from 52% a year ago)
The priciest markets in North America are Portland, Calgary, San Diego, Seattle, Oakland, and Montreal. The cost of a medium build out averages US$105 per square foot in Portland, the most expensive market. The lowest cost markets are Houston, Memphis, Mexico City, Guadalajara, Nashville, and Louisville.
Given recent demand of industrial construction, do not expect any slowdowns in the construction pipeline in the near future.
Pandemic’s lingering effects continue to inflate industrial real estate costs, Inside Logistics, January 25, 2023. Accessed Feb 3, 2023.