Your Office Move is Entering the Construction Phase
For this part of the process, you’ll need to keep a close eye on your bank account. Costs of labor and materials are up over last year — and in some cases, they are a lot higher.
Construction labor costs
Labor costs will take a bigger bite out of construction budgets this year thanks to a shortage of workers. The construction industry cut its labor force by nearly 40% between 2006 and 2011. Even though construction is a booming industry again, the workers haven’t returned. Additionally, fewer skilled workers are coming out of tech schools, so the end of the labor shortage isn’t in sight. That means that workers can command higher wages, so more of your construction budget will go toward paying for labor than ever before.
Cost of construction materials to consider during an office move
Meanwhile, the cost of materials also continues to rise. Softwood lumber prices are especially high because of the expiration of a trade agreement with Canada at the end of 2016. But prices for diesel fuel, steel, copper and wallboard also are increasing. At least some of the rise in prices can be attributed to a ripple effect of supply and demand patterns: costs of current and future projects are on the rise, so the cost to the developer goes up, which means the cost to the consumer goes up, so consumers spend less, which means real estate investments goes down.
What to do
All of this means remodeling or constructing a new office will cost more this year than it did last year. And that means you must be strategic about how you’re spending your money and where you’re cutting corners to save cash. (If you’re looking for some ideas on how to save money on some of your construction materials, this might be helpful.) Talk to your contractors and be realistic about your budget.
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We can help!
If you haven’t downloaded it yet, you can get our Lease Timeline Checklist to help you plan your new office. This is the type of framework we use for all our clients at LCRE. We will provide a customized version for you based on your specific needs in retail, office, or industrial. We help our clients find the best spaces to lease and also the best properties to purchase.