When the COVID-19 pandemic shut down Central Pennsylvania in early 2020, there were a lot of unknowns. The construction industry wondered how big of a hit it would take and how long it would be before the market rebounded. While warehouse, distribution, and industrial construction were strong prior to the pandemic, no one could have predicted how these markets would thrive during and after the pandemic due to changes in consumer preferences (e.g., shopping online) or the impact it would have on supply/demand. Today, design-build industrial facilities are in high demand, but supply and labor shortages are causing increased material costs and lead times. Combined, these factors are impacting the decisions developers make as well as the building construction process.
At Mowery, as part of our “Design. Build. Done” promise, we are committed to providing a remarkable construction experience, which includes serving as a resource for timely, transparent information and helping clients navigate the supply/demand impacts. As we wrap up the third quarter (Q3) of 2022 and look ahead to the fourth quarter (Q4), the push and pull of labor and supply is ongoing. To help our clients and professional partners plan their projects, we are sharing an update on what we are seeing in key areas of the industry that continue to impact project costs and schedules.
A Look Back
When 2022 began, material costs and lead times were ranking above average. As we moved through the second quarter of the year, prices continued to rise significantly, some reaching an all-time high at the end of June, including:
- Mechanical, Engineering, and Plumbing (MEP) Products
While the trends at the end of Q2 had many on edge about what would come next, Q3 brought positive changes. Not only did the cost of steel, roofing, MEP products, and diesel decrease, lead times improved across the board. Both steel and roofing returned to their normal four-to-six-month timeframe.
Q4 Material Costs & Lead Time Predictions
As we look ahead to the last quarter of 2022, the bottleneck has loosened and the supply chain is beginning to catch up in some areas, moving cost trends in the right direction and improving lead times. While we expect a positive outlook for Q4 2022, there are still a few areas project owners should keep their eyes on.
- One outlier that continues to rise in cost due to material scarcity is concrete. This month, we saw yet another increase in cement costs and do not predict it will decrease in October.
- Piping materials for both sitework and fire protection are expected to remain relatively flat.
- Switchgear remains one of the major challenges as it relates to lead time. Components are currently taking anywhere between 50 and 72 weeks to receive, with some expedited options available for a premium cost.
- Good things appear to be ahead for roofing. Previously, roofing was an unpredictable material and suppliers would not provide a fixed price until delivery, which could be months out. Now, suppliers are looking to lock in guaranteed pricing on upcoming projects, reducing the impacts on total project costs and the need to carry large escalation contingencies.
Building Remarkable Industrial Facilities During Supply Chain Uncertainties
At Mowery, we understand when designing and building a new, multi-million square foot warehouse and distribution center or industrial facility, money and time are key. As shifts have occurred in the supply/demand landscape, we put our deep industrial construction expertise to work to provide value to our clients. Through the development of cost and time effective solutions (e.g., collaborating with the client to select alternative finishes, ordering materials months ahead of schedule and providing storage until they are needed, etc.), we have been able to successfully bring our client’s visions to life within their original project scope.
One example of an industrial project our team successfully brought to life during the pandemic and supply/demand uncertainties is NorthPoint Development’s Carlisle Industrial Building I. For a look at how our team remained true to our “Design. Build. Done.” promise, including the creative solutions we provided to navigate the pandemic and supply/demand challenges, download the NorthPoint Development – Carlisle Industrial Building I project case study today.
Experience The Mowery Difference
At Mowery, we design and build each industrial facility as if it is our own, providing quality, speed, and cost certainties along the way. Our experienced team brings efficiencies and resources to each project, delivering the results you need and providing peace of mind. Experience the Mowery difference today. Get in touch to discuss your industrial construction or warehouse and distribution project!