Fluctuations in commodity prices and labor shortages are driving up construction costs for retirement homes
The cost of building retirement homes is still relatively high thanks to significant fluctuations in the price of certain commodities and a tight labor market in the construction industry.
This is according to the latest construction cost of living for seniors report from The Weitz Company. The report, released on Tuesday and assembled by Weitz Co. Senior Vice President Larry Graeve and Estimator Amy Burk, details typical construction costs for the retirement home industry as of the summer of this year. .
For a mid-level assisted living project – defined as a generally wood-frame community with standard amenities and finishes – stakeholders in the life of the elderly can expect to pay around $ 212 to $ 272 per person. gross square foot, according to the report. For high-end assisted living projects with steel or concrete construction and luxury amenities, costs typically range from $ 285 to $ 337 per gross square foot.
This is an increase over construction costs that the industry experienced earlier this year. According to Weitz’s Winter 2021 Construction Cost Report, mid-level assisted living projects were previously between $ 200 and $ 255 per gross square foot, while high-level projects were between $ 268. and $ 316 per gross square foot.
These costs include terms and conditions, insurance, taxes, deposit and fees, but site costs have been excluded. Costs are generally higher in large metropolitan markets and lower in less competitive ones.
The high cost of building materials and labor complicated the retirement home projects that were underway this year and held back new construction starts. In general, construction costs for retirement homes have increased every year since the Great Recession. And although they fell when the pandemic hit in 2020, construction costs have been rising steadily since.
There are two major driving forces behind the current cost of building senior housing. One is the price of commodities such as lumber, which hit record levels in May before falling back in July; and steel, which has become more expensive over the past 12 months.
“Lumber cost about $ 950 per 1,000 board feet, climbed to $ 1,950 in early May, then fell to $ 800 per 1,000 board feet in July, while futures on July timber points even lower, ”the report says. “Steel has grown steadily over the past 12 months. For example, the stock of coils, which is used to make metal poles and metal decks, increased by 216%.
The other driver is the cost of labor. While labor rates have only increased “moderately” this year, prices are under pressure amid a general shortage of skilled workers, according to the report. The construction industry is facing a shortage of about 430,000 workers needed to meet current demand, according to Associated Builders and Contractors.