Willmeng hosted the second in a series of Fence Post informational sessions on Wednesday. Part of the presentation included a look at current construction cost trends in the market, which was led by Vice President of Pre-Lease Estimating Thomas (TJ) Jarvis and Pre-Lease Estimating Manager Arun Ghosh. The pair shared the latest information about construction costs for two product types: industrial shell buildings and tenant improvement projects.
Tom Jarvis and Arun Ghosh noted that the costs to build a large industrial shell building have decreased since late 2022, continuing a trend that started in mid-2023. The reduction is attributed to fewer delays in receiving key materials and lower prices for concrete and lumber. However, challenges remain with long lead times for electrical equipment and higher costs for specialized machinery. Additionally, there are fewer large-scale industrial projects in progress, with more focus on smaller sites and conversions, which can increase costs due to additional site work requirements.
Tenant Improvement Costs
Regarding tenant improvement projects, costs for a typical commercial office build-out have risen since early 2022 but have recently experienced a slight decrease. The increase in costs has been driven by high demand for HVAC equipment and electrical gear, as well as competition for skilled labor due to major projects drawing resources away.
There was also time for questions from those in attendance and the topics included the change in the law on coolant for new air conditioning units and how that will impact future projects, current lead times on certain electrical gear and how to navigate those issues on projects and predictions on whether or not the current trends of easing construction costs will continue.
