Raw Material Price Hikes Impact Cost of Construction for Montrose Commercial and Residential Projects | Local news stories

The construction schedule for the 55,000 square foot FLEX buildings in the Colorado Outdoors area in Montrose is “on track,” said David Dragoo, founder of Mayfly Outdoors, in an update, with structural steel on the building G (north building) to be completed in one week, and the metal framework of building F (south) will begin on June 9.

The schedule remains unimpeded despite huge price increases for materials like steel and wood. The price of steel last March hit $ 1,270 per tonne, marking only the second time that prices have crossed the $ 1,000 mark (2008).

“The lumber, lumber, lumber, steel and plastic pipe markets are all really messed up,” said City Engineer Scott Murphy. “Everything is hyper inflated with the frenzy and other market forces, supply chain issues.”

Supply and demand remains one of the biggest reasons for the price increase, and the pandemic has caused steel mills to temporarily slow production or shut down altogether, resulting in supply shortages.

The increases did not affect the FLEX Buildings project, however, as the team placed orders for products they needed in February and March, before prices increased.

“In this market, it looks like a luxury,” Dragoo said.

Currently, that’s another story for Wedge Brands’ 76,000 square foot third-party logistics and distribution center, to be built south of the FLEX buildings just across the street. The cost of building the center’s buildings has risen by around 5-6% over the past two weeks, a price hike of around hundreds of thousands of dollars (over $ 300,000).

This only represents the “skeleton” of the building, with the price of steel rising “astronomically,” Dragoo said.

“You see price increases for a few seasons happening in a few weeks,” Dragoo said.

It is “too early to tell” whether the construction schedule for the Wedge Brands facility will be affected by the price increases, Dragoo added. The start of construction is currently set for summer 2021.

Previous estimates had construction starting in 2020, with project completion in 2021, but the effects of the pandemic have delayed the start date.

Shaw Construction subcontractors work on Building F, one of two FLEX buildings under construction at Colorado Outdoors in Montrose. (Josue Perez / Montrose Daily Press)

Colorado Yurt’s quote on steel for its planned Colorado Outdoors headquarters is 30% higher than it was a month ago, city engineer Scott Murphy told the Montrose Daily Press, but, According to the Colorado Yurt team who brought the quote back to the city, it won’t change the construction schedule – the plan is yet to be kicked off this summer.

With such a volatile market, it is possible that the prices of steel and other materials will drop over the next few weeks or months, leaving Colorado Yurt owner John Gibson and his team without having to worry. adapt to price increases.

The city also recently met with the team leading the Basecamp Apartments project, a multi-family development on a 3.6-acre parcel near North Grand Avenue and west of the Uncompahgre River, who have said they intend to to move forward with their construction schedule despite the increase. , Murphy said.

“Everyone is playing this game of waiting to lock the controls,” Murphy said.

As mentioned, there is enough time left for the prices of commodities to come down, so that orders for these materials could be placed at a much lower price. But it’s a trend in the industry that John Fortner, project superintendent for Shaw Construction, which helps build the FLEX buildings and the public safety complex (new police department building), hasn’t seen over the course of time. of his 10 years in the industry.

Shaw construction sign

Outside the construction fence, with structural steel in the background of the G building (Josue Perez / Montrose Daily Press)

“Recently, we have struggled to convince our suppliers and contractors to set prices for one to two weeks,” said Fortner. “Due to price and material volatility.”

Usually, subcontractors would lock in prices for up to 90 days. Now, rather than taking high financial risks, that time frame has been limited to seven to 14 days.

Residential projects have also been affected by commodity shortages, leading to higher construction costs. The cost of wood alone in April was up 200% since the start of the year.

There is slight concern, Dragoo said, that the latest developments could slow projects down and cause delays, with project managers having to wait for prices to drop. But with so much uncertainty in the market and its volatility, it is too early to determine how timelines might be affected, he added.

What might be clear, however, is the increase in valuations of commercial and residential properties during the county’s next reassessment in 2023. With construction costs rising (for now), that means future homes and current are expected to see higher valuations, as well as commercial properties like the Wedge Brands facility and FLEX Buildings.

Josue Perez is a writer for the Montrose Daily Press

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