Multifamily construction delays are getting longer due to many factors, including supply costs and staffing challenges. Money is becoming a bigger issue for multifamily construction, with project costs increasing to the point of causing financing struggles. Despite the industry’s challenges, new innovations may help multifamily construction adapt and recover in the years ahead.
Supply Chain Challenges
Multifamily construction delays have been a concern since 2020, but many hoped things would improve three years later. As of Q3 2022 — with 2023 fast approaching — supply and demand remain the most significant cause of ongoing construction delays. Surveys show 76% of multifamily construction project leaders report experiencing price increases, which can cause delays.
Components reportedly going up in price include appliances, roofing, exterior finishings, insulation and electrical parts. There are a variety of factors that could be contributing to price surges. For example, construction companies may be attempting to minimize the impact of shipping delays by buying substantial bulk quantities of certain items. The issue with this strategy is it creates higher demand for those items, resulting in higher prices.
When prices for crucial materials go up, it can lead to project financing costs. A few dollars more for a light fixture may not seem like much, but in multifamily construction, that price increase is multiplied by numerous units. Cost increases are augmented further by any errors or accidents on site.
All of these factors can lead to a rise in a project’s overall cost, potentially taking it far over budget and resulting in delays while project leaders decide what to do. Even if a project does move forward, it may take time to secure additional funding.
Safety and Permit Requirements
Safety requirements can also result in multifamily construction delays. Since safety is a serious concern in the construction industry, project leaders need to prioritize it. However, some precautionary measures are contributing to project delays.
For example, certain types of ceiling fixtures need specialized coverings due to fire safety regulations. These coverings do improve the quality and safety of the structure. Unfortunately — as discussed above — building materials are still causing considerable challenges for multifamily construction. Electrical components in particular are facing price leaps.
Similarly, building permits play an increasingly prominent role in multifamily construction delays. Of course, construction professionals are familiar with the ups and downs of the building permit application process. However, wait times have remained high over the past year. A Q3 2022 survey by the National Multifamily Housing Council found 53% of projects had permit wait times between three to six months. A shocking 22% of projects had to wait over nine months to get their building permits.
The same survey found 86% of projects reported experiencing a delayed start, likely due in large part to a prolonged paperwork process. Unfortunately, this type of delay issue is not something that can quickly resolve. What contractors and construction firms need is some type of action by the federal and state organizations overseeing construction-related paperwork. The wait for building permits may only worsen the more backed up permit offices get.
Staffing Shortages
A significant factor contributing to multifamily construction delays is staffing shortages in the construction industry. Labor shortages have been an issue for years, even before the COVID-19 pandemic began in 2020. This is largely due to a wave of retirements in the aging construction workforce. Young people need to choose construction jobs in larger numbers to meet demand.
According to the Associated Builders and Contractors, the industry is down 650,000 construction workers as of 2022. When construction projects are forced to work with significantly smaller teams as they have been, things are bound to slow down. Contractors and construction firms can get backed up due to projects taking longer than expected, creating start delays on future projects over the long term.
Additionally, higher demand across different construction areas contributes to delays in multifamily projects. For example, the Infrastructure Investment and Jobs Act passed in 2021 is pouring large amounts of funding into new infrastructure projects. This is great for the nation and new jobs but adds to the demand facing contractors and construction firms. They simply don’t have enough people to cover so many projects at once.
The housing construction boom also played a role in straining short-staffed construction teams. Massive demand for single-family homes from 2020 through 2022 took up a lot of the time and work in the housing construction industry. The market appears to be settling down again, which may help construction companies catch up and get back on their feet. While this may reduce delays for some multifamily construction projects, a housing market crash could lead to financing difficulties, another cause of delays.
Can Multifamily Construction Adapt?
Can the industry adapt to reduce multifamily construction delays? A few factors could help construction companies diminish or avoid delays over the long term. For example, adopting robotics and IoT devices may help construction companies use their tools and materials more efficiently, reducing strain on the supply chain. Teams can use IoT devices for predictive maintenance — which involves repairing construction equipment before a critical failure occurs — reducing equipment downtime and expenses.
Additionally, new hiring approaches may reduce the construction worker shortage. For example, an organization in New York called Nontraditional Employment for Women is helping women get affordable job training in many industrial careers. Women from programs like this could become an excellent source of highly skilled, well-trained construction professionals while also bringing more women, people of color and young people into the industry.
New construction methods on the horizon could also transform multifamily construction. Over recent years, construction-grade 3D printers have been developed capable of building the walls of an entire house in one or two days. This new additive construction method uses building materials more sustainably and requires fewer construction workers. Project timelines can also significantly reduce, allowing construction companies to build more in less time.
This is no longer a theoretical technology, either. In 2022, 3D-printed home builder ICON began construction of the world’s largest neighborhood of 3D-printed houses in Austin, Texas. Over the next decade, this technology is likely to become increasingly mainstream. It could be a game changer for multifamily construction due to the building speed and efficiency, resulting in lower costs and higher construction quality.
The Future of Multifamily Construction
The entire construction industry is facing some difficulties right now. While the past few years have been challenging for construction companies or clients, things will eventually improve. New technologies and trends in the industry could help reduce multifamily construction delays over the long term. As the industry adapts and innovates, multifamily construction may become more sustainable, affordable and resource-conscious.
Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry.
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