Dive brief:
- The boom in megaprojects is not only uprooting part of the labor from other projectsbut also very necessary materials, according to a Cushman & Wakefield reporta Chicago-based commercial real estate services company.
- For example, contractors in the life sciences sector report lead times increasing from four weeks to nearly two years for materials such as generators, electrical appliances, switchboards, AHUs and elevators, said Jason D’Orlando , senior managing director at Cushman & Wakefield.
- “We are still seeing that labor and material shortages are not only causing cost increases but constant delays for companies looking to move or expand,” D’Orlando said. “They’re affecting potential growth opportunities.”
Diving knowledge:
Multibillion-dollar government infrastructure projects and net zero efforts are stiffening competition for frequently used materials.
Inflationary pressures, along with labor constraints, have led to critical material shortages and high costs for projects outside the megaproject boom, according to the Cushman & Wakefield report.
For life sciences construction, contractors should expect to continue to experience delays in the following supplies, according to the report:
- Audiovisual and security systems: microchips, logic boards.
- HVAC equipment including AC units, air handlers, special equipment.
- Electric lighting, electrical appliances.
- Manufactured millwork.
- elevators
Additionally, increased demand for materials used in electrification efforts, such as copper and electrical appliances, will only apply more upward pressure on both prices and delivery times, according to the report.
For example, electrical appliances, which during normal production periods took four to six months to obtain, have experienced delays that have doubled, and even tripled in some cases, over the past year, according to the report.
At the same time, the labor limitations continue to hamper staffing projects, especially as megaprojects in the US consume potential labor from other projects.
This suggests the pipeline for the lab space has reached its maximum in the United States, according to a recent life sciences report by JLL, a Chicago-based real estate services firm. The report mentions that the completion of the projects should exceed the new projects started in the short term, thus reducing the pipeline.
However, life sciences construction activity remains well positioned to recover. That’s because demand for lab space will return when venture capital picks up again, according to JLL.
While the immediate future of private equity flows deployed in life sciences construction activity remains uncertain, the record dry dust among the top 20 venture capital firms suggests a hopeful outlook. With this strong level of capital available, investment in 2024 is likely to pick up again, according to the JLL report.
