Dallas April 2022 Key Take Aways
- While many companies were able to adjust to working remotely during the pandemic, the majority of the incoming business has been referrals and existing clients. It’s difficult to foster new relationships remotely. It’s also difficult for young employees to build relationships and grow within a company without being in the office. The Texas bar passing rate was 50% instead of the usual 90%, which suggests remote learning was not as effective as in-person. (Rick Lackey – REAL Professionals Network, Kimber Davison – Griffith Davison, Lindsay Rattler – BOK Financial)
- Multi-family development continues to be busy and retail has also been coming back. (Steve Bruszer – Spring Valley Construction Company)
- Supply chain issues and labor shortages continue to be a huge obstacle, particularly for new construction. It’s better to work with familiar companies who are willing to share in the risk of fluctuating prices and delivery schedules. (Steve Bruszer – Spring Valley Construction Company, Lindsey Rattler – BOK Financial)
- Some investors are willing to invest in risky deals they may not fully understand because the market is so volatile. (Sarah Waterman – McGuire Sponsel)
- It’s unlikely that a new tax bill will be introduced this year, partly due to inflation concerns and partly due to the upcoming election. (James Smith – Smith, Jackson, Boyer & Bovard, PLLC)
- Some clients are liquidating properties due to the high prices, though with the uncertainty in the market it’s not clear what the next few years will look like. (James Smith – Smith, Jackson, Boyer & Bovard, PLLC)
- Income inequality and affordable housing are a huge issue that’s likely to become a larger problem in the future, particularly as Class C apartments are upgraded to more expensive units. Some cities and counties are offering subsidies to developers with affordable housing projects. (Blake Lugash – Realty Capital Partners, Rick Lackey – REAL Professionals Network, Kimber Davison – Griffith Davison)
- Companies are working hard to retain employees, offering mid-year raises, bonuses despite poor profit returns, and other creative perks to keep employees happy. (Meloni Raney – TEXO, Steve Bruszer – Spring Valley Construction Company)
- Production costs have been rising more quickly than bid prices, creating an unsustainable gap. (Meloni Raney – TEXO)
- PPIs are up for many items. Lumber has come back, steel pulled up a little, fuel is way up, and aluminum was up 100% recently. With large fluctuations it’s difficult to price materials until they show up. (Meloni Raney – TEXO)
- The cost squeeze on construction prices can last two years or more. (Meloni Raney – TEXO)
- Forward-looking indicators are showing positive signs, including the ABI (Architecture Billings Index), DMI (Dodge Momentum Index) and Multi-Family permits. (Meloni Raney – TEXO)
- Some medium-term impacts of recovery include Ukraine / Russia, cost and supply chain challenges, and labor issues – craft professionals in the construction industry used to get 20-23% more than other industries. Now it’s at 17%, which is starting to impact construction industries. (Meloni Raney – TEXO)
- Factors impacting the long run include slow population growth meaning slower demand for construction, a slower demand for education, and a permanent shift to e-commerce. (Meloni Raney – TEXO)
- Ken Simonson prepares a monthly data digest and an inflation report, which some contractors are including in contracts to explain rising costs to clients. ken.simonson@agc.org (Meloni Raney – TEXO)
Recent Comments