54.3 F
San Diego
Thursday, Mar 28, 2024
-Advertisement-

Commercial Construction Projects Faced With Rising Cost of Materials

Though residential construction is slowing in San Diego County, the cost of nonresidential construction is increasing due to the rising cost of materials.

According to the Association of General Contractors, the cost of commercial construction is up 15 percent year to date, while retail and warehouse construction are up 28 percent, office construction is up 22 percent and lodging up 60 percent.

The AGC released its monthly spending report Sept. 4 for construction spending from January through July. Ken Simonson, the AGC’s chief economist, said health care, education and highway construction spending also are up.

Along with increased spending came increased prices of aggregate, aluminum, cement, concrete, copper, drywall and steel.

Paul Tryon, chief executive for the San Diego chapter of the Building Industry Association, said the price of core materials has been impacted by a strong global economy.


Volatile

“It is pretty volatile, but again we have had a strong economy in the United States and a high consumption of these materials for a sustained period of time,” he said.

Tryon said national costs for lumber have dropped during the past two years but have not dissipated a 23 percent increase that came between 2003 and 2004. He said plywood jumped 30 percent in the same period.

Drywall increased 16 percent between 2003 and 2004, 15 percent between 2004 and 2005, 20 percent between 2005 and 2006, and more than 23 percent between 2006 and 2007, according to the BIA.

Also, cement prices leapt 11 percent to 13 percent each year during the past three years while concrete increased 10 percent each year over the same period, said Tryon.

With construction becoming more urban with an upward trend in high-rise and multifamily projects, more concrete and steel is required, which drives up building costs.

“Ultimately, that gets passed back down to the consumer to the extent that some projects remain economically feasible and some do not,” he said.

Tryon said cost run-ups not only affect developers but also taxpayers who pay for public works and public buildings as well as buyers of residential and commercial properties.


Bond Money Doesn’t Go Far

“San Diegans are the ones that get hurt,” Tryon said. “Our bond money for infrastructure just doesn’t go as far.”

A representative with the San Diego Association of Governments said the rise in the cost of concrete and steel has significantly pushed up the costs of highway projects.

Charles “Muggs” Stoll, acting communications director, said when Sandag updates its transportation budget early next year, adjustments will be made to reflect rising costs of materials.

“The bottom line is everyone has budgets,” said Stoll.

According to the California Department of Transportation, aggregate base increased $1.70 per ton from the first quarter of 2007 to the second quarter, while asphalt increased $4.52 per ton. Concrete used for pavement increased $8.42 per cubic yard, concrete used for structures increased $200.20 per cubic yard, and structural steel increased $2.33 per pound for the same period.

Gary Johnson, aggregate resource manager with the Temecula office of Granite Construction Inc., said prices of aggregate have been increasing locally because of the shortages countywide. He said 50 percent of sand and stone used here is imported from other counties. And while a truckload of aggregate material might cost $400 to $500, the cost of shipping , even 40 miles , doubles the cost of the delivery.

“Transporting aggregate from Imperial County into San Diego or from Riverside County or San Bernardino County into San Diego drastically raises the price of materials, which drastically raises the price of road construction, housing, hospitals, schools and anything that requires sand and gravel to build it,” said Johnson.


Increases Adding Millions

He said a 15 percent increase in the cost of aggregate might increase the cost of a house $6,000 but adds millions of dollars to road projects.

“Prices will continue to rise unless the city and county will approve more sand and gravel pits in San Diego,” said Johnson.

The San Diego chapter of the American Concrete Institute hosted a seminar to discuss California’s looming shortages in construction aggregates on Sept. 12.

Steve Bledsoe, president of California Construction and Industrial Materials Association, said materials required for highways, road, streets, as well as hospitals, houses and schools will soon be in short supply, which could further drive up the cost of construction in the state.

Ed Trasoras, president of ACI, said San Diego ran out of sand, a key component in making concrete, about 10 years ago. Trasoras said the county will run out of hard rock, another component needed for concrete, by 2010.

“We have material available but we can’t get permits to get it,” he said.

Trasoras estimates the cost of concrete will double from its current price in the next three to eight years.

“Pretty soon we will have more demand and less supply,” said Trasoras.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-