High demand for contractors, even though construction is becoming way more expensive
Massachusetts contractors are as busy as they’ve ever been. Builders are trying to keep up with a heavy demand for new lab space, thanks to employers in the booming biotech industry willing to pay premium rents. There is also more demand for big residential buildings, which the Baker administration has encouraged through tax incentives.
Despite the booming business, the construction industry is facing a lot of challenges.
“There has never been a more volatile time in my 49 years in this business,” said John Tocci, the CEO of The Tocci Building Corporation. “As far as price escalation, supply chain problems, professional labor shortages, trade labor shortages”
Tocci remembers when the price of wood tripled in a six-month period between May and November 2021. That kind of jump makes long-term planning and budgeting extremely difficult. It can take years to obtain permits and designs for a new commercial building or a big residential building. The budget could be outdated by the time contractors actually start building.
Prices for commodities such as steel, wood, aluminum and diesel have dramatically increased. As of May, the Producer Price Index (PPI) for all construction materials is up by 51.6% according to numbers from the Bureau of Labor Statistics when compared to May 2020.
To make things worse, there's a severe labor shortage of skilled trades workers, which means recruiting is fiercely competitive.
“Employers are having to pay 30, 40, sometimes even 50% for the same job descriptions,” Tocci said.
Tocci said workers at his business have had to rethink building designs, making plans and the materials more resistant to wild price fluctuations in the long term. While he doesn’t think the extreme volatility is going to last forever, he doesn’t expect prices to ever go back to what they were before the pandemic.