Last month, we were asked by WZZM to help explain the impact of tight lumber supply due to high demand and diminished supply on the building industry. This month, we're watching lumber markets recover (lumber futures are currently 59% lower than their May 7 peak) while seeing clear signs of volatility in other materials markets.
It's not just lumber that's on a bumpy ride.
Like the broader economy, the construction industry commodities market is a delicate balance that's been thrown off by raw material disruptions, transportation challenges, and labor shortages caused by the 2020 pandemic - followed by increasing demand in 2021. According to a report from forconstructionpros.com,
commercial construction is projected to grow by 6% this year and another 10% in 2022. This new pipeline of project starts is causing materials vendors to quote not just higher prices, but also long timelines to deliver materials to job sites.
Price and schedule benefits for projects breaking ground in 2021.
Projects that are currently underway or soon to break ground are moving ahead with few issues, but projects that will start in 2022 are vulnerable to the looming price and schedule impacts. The ongoing material volatility is resulting in uneven demand that is on the verge of impacting construction schedules, causing project gaps that our trade partners are actively looking to fill.
From our point of view, a trend toward pricing opportunities from trade partners will begin this fall as high commodity prices begin to moderate or drop and contractor backlogs shorten. This market environment points to better materials pricing starting this fall, followed by the potential for steep increases in demand in 2022. The other factor we're watching is the potential for expanded U.S. infrastructure projects in 2022 that may tighten the materials market further.
Bottom line - if your business plans include expanding or renovating your facilities - now is the time to get started. Projects with design and planning work underway this summer may benefit from a fall 2021 market "sweet spot".
This climate calls for a great GC, who is a committed partner, and a knowledgeable consultant.
As an experienced, full-service general contractor, the aj Veneklasen team can advise you on all the nuances of this complicated market and how it may positively or negatively impact your particular project. Our VENEBUILT
process is designed to help customers navigate this kind of complexity, bringing the right partners, design, and construction management experts together to quickly and confidently guide you.
Let's talk soon about when and how to approach your next project.