Following an August we will not soon forget, Hurricane Harvey made landfall in Houston at the end of the month causing an estimated $198 billion in property damage. Hurricanes Irma, Maria and Nate followed shortly after, leaving Florida, Puerto Rico and Mississippi reeling with exorbitant rebuilding expenses.
Prior to the devastation that pummeled the Gulf Coast, commercial contractors reported in a third-quarter Commercial Construction Index survey that they anticipated revenue and profit margins to grow or remain stable over the next year. In fact, the 2017 Turner Building Cost Index registered a nearly five-percent hike in yearly comparisons of second quarters.
The aftermath of the storm saw the demand for construction materials rise. In the Houston area alone, Thomas Index Report, a firm linking buyers and sellers, recorded a 400-percent increase of drywall inquiries; 150-percent rise in plywood and 2,000-percent boost for hardwood flooring and concrete.
Vice President of Marketing at ThomsNet Shawn Fitzgerald believes the supply trend is not surprising considering the extent of the combined disasters. “With so much damage to businesses and infrastructure, sourcing trends in and around Houston have changed drastically in the weeks following its landfall as the areas look to rebuild and recover.”
In order to meet growing construction demands, contractors in many states are expanding employment numbers. Texas added 15,200 construction jobs over the last 12 months, up 2.2 percent when measured against figures from the prior year. While a sudden increase to the construction workforce in Texas may assist in some aspects of the recovery, Jeff Myers, a managing consultant for CoStar Portfolio Strategy, believes the flow will not be significant enough to guarantee project timelines or preserve low cost.
The surge in demand from multiple U.S. locations will further intensify the burden on material delivery times, as well as pricing in many other areas throughout the country.
For more on this topic, check out CoStar Group’s Storm Fallout: Rebuilding Likely to Drive Up Construction Costs, Delay Project Timetables Across US.