Florida’s construction industry continues to experience a labor and material scarcity, which causes delays and cost hikes for residential, commercial, and even government projects from Tallahassee to West Palm Beach to Naples.
According to John Thomas, CEO of the Home Builders and Contractors Association of Florida’s Space Coast, these factors are making the state’s current housing affordability and availability issues worse.
He said: “As construction costs rise, developers may pass these costs along to homebuyers or renters, potentially resulting in higher housing prices or rental rates.” Furthermore, delays in new projects may further reduce the housing supply, extending the gap between supply and demand.
At his construction sites in Southwest Florida, Matt Sellick, president of Stock Development’s luxury and custom homebuilding division in Naples, is directly experiencing the effects.
In the end, Sellick remarked, “it’s still a daily struggle. “The labor is simply not available to meet the current demand.”
He claimed that subcontractors have trouble placing “bodies on job sites.”
And “sometimes, bodies are just not the answer,” noted Sellick. “They are sending people out there, but then the question arises: Are they qualified? Do they have the necessary skill sets?”
What does the lack of manpower mean for the builder’s clients and customers? According to Sellick, a home that used to be built in 12 months could now take 15 and one that was completed in 15 months could now take 18 to 20.
He continued, “If it’s more complicated, it could take even longer.”
Supply-chain problems and a lack of manpower, according to Mike Jaffe, director of operations at Christopher Alan Homes’ East-Central Florida branch in Palm Bay, can push up the cost of a new home by as much as 20%. That increases the price of a $300,000 home to $360,000 and a $500,000 home to $600,000, respectively.
At the Pangea Park development in Brevard County’s Viera planned community, a construction crew is at work. The Viera Co. is the developer, and Viera Builders is the construction company. Homes at Pangea Park range in size from 1,795 to 3,647 square feet and are priced from the mid-$400,000s to the $700,000s.
Jaffe, who is also the first vice president of the Florida’s Space Coast Home Builders and Contractors Association, concurred with Sellick that certain builders are being pressured to hire employees who are less qualified and, consequently, less effective. He claimed that doing so drives up building costs and duration.
Supply chain bottleneck after COVID still a problem
The enormous Viera planned community in Brevard County was developed by The Viera Co., and Eva Rey, vice president of community management and communications, claimed that since the COVID-19 epidemic started in 2020, its subsidiary Viera Builders Inc. has experienced both material and staff challenges. Both have improved a little, but not enough to return to their pre-pandemic states.
“The labor markets and supply chain are moving in the right direction,” added Rey. Longer construction times result in higher costs for both the builder and the end-user, but the pandemic’s significant labor and supply shortages, combined with higher-than-anticipated demand for new homes, created a bottleneck that hasn’t yet been fully resolved.
The Viera Co., the organization responsible for creating the Viera planned community in Brevard County, employs Eva Rey as vice president of community administration and communications.
Construction delays were initially brought on by pandemic-related supply-chain problems, but today’s difficulties are “primarily driven by the high demand, fuelled by Florida’s explosive growth,” Thomas said.
He claimed that many times, builders or developers initially cover these higher charges. Due to the needs of the project, they could have to hire more people or buy more expensive supplies, which will increase their costs. These extra expenses could affect the project’s profitability and possibly cause delays or changes to the schedule for development.
Outside of a house that Stock Custom Homes is building in Naples’ Bay Colony, regional director of construction Chad Moore is on the phone. According to stock officials, it can be difficult to locate enough construction workers to match demand.
The costs resulting from labor and material shortages may ultimately affect the entire supply chain, according to Thomas. “Subcontractors, suppliers, and manufacturers may need to pass on their own increased costs to the developers, leading to higher project expenses, which then may be passed on to the end users or consumers.”
The effect on building costs varies based on the exact project, region, and market circumstances.
“But it is safe to say that the combination of increased demand for construction projects and limited availability of skilled labor and materials has led to cost escalations in various areas across Florida,” Thomas added.
According to him, contractors cannot absorb all the increases in labor and material costs without also raising their construction costs.
John Thomas, the president and CEO of the Florida Space Coast Home Builders and Contractors Association.
“Affordable housing is a huge issue,” Thomas added, in part because of this.
Additionally, the scarcity of reasonably priced homes and apartments makes it difficult for companies to find qualified candidates across a variety of sectors, including tourism, health care, law enforcement, and construction.
why there is a labor shortage
According to a recent Associated General Contractors poll, 91% of construction companies nationwide reported having trouble filling vacancies.
The lack of workers has a number of causes. The workforce is getting older, fewer young people are choosing to work in construction, and there aren’t enough programs for vocational training.
At the Bay Colony neighborhood of Naples, Carmelo Raphael works on wire installation inside a house.
According to Thomas, who noted that trained labor is frequently difficult to come by, “the surging growth in Florida’s real estate development and construction industry has created a high demand for skilled trades, making it challenging to find sufficient manpower today and for construction projects in the future.”
Carpenters, electricians, plumbers, HVAC professionals, and masons are just a few of the skilled workers needed in the construction business, according to Thomas.
In Naples’ Bay Colony, Calvin Jackson, left, and Maycol Garcia work on a home’s heating, ventilation, and air conditioning system.
The demand for development has increased as a result of Florida’s population growth.
Based on the percentage increase in population, data from the Census Bureau show that Florida is currently the state with the greatest growth in the country. For instance, Florida’s population increased by 1.9%, or 1,142 people each day, between July 1, 2021 and July 1, 2022.
“More homes, apartments, condos, stores, offices, and government buildings are needed to accommodate the growing number of residents,” Thomas declared. It’s a matter for concern for the future that the supply of skilled people hasn’t kept up with this demand, as it has resulted in labor shortages.
Both the state’s urban and rural parts face difficulties.
In Viera’s new Laurasia gated community, where houses range in price from $700,000 to $900,000 and have 2,708 to 3,937 square feet of living space, construction is currently under way. The Viera Co. is the developer, and Viera Builders is the construction company.
The availability of local labor resources may be further strained in some locations due to a higher concentration of construction activity, according to Thomas. In other instances, remoteness or a lack of infrastructure in some areas may deter workers from moving to or traveling to construction sites.
According to Jay Smith, president of Ajax Building Co. in Tallahassee, who has 60 to 70 significant projects underway in Florida and the Southeast, the continuous shortage of trained labor is an issue. His organization assembles a team of subcontractors, including men and women charged with carrying out the work, and assumes the roles of construction manager and general contractor.
According to Smith, “as an industry and as a nation, we kind of ignored workforce development for years,” which is why there are so many competent workers in the construction sector who are in their 60s.
We’re currently in a boom, he remarked. “Everyone is feeling the effects, so you see slower product delivery.”
Impacts of hurricanes increase the stress on workers and supply chains.
The stress has been exacerbated by recent hurricanes, including Hurricanes Michael, Irma, and Ian.
“Various problems linked to population increase were responsible for the labor deficit and materials bottleneck, which existed even before these catastrophes… problems in the supply chain and rising construction demand,” Thomas said.
Particularly in places severely affected by the storms, “the hurricanes have added to the challenges by increasing the demand for both labor and materials,” Thomas said.
For instance, in Southwest Florida, builders have difficulties because of overbooked construction personnel and prolonged schedules.
Lee County, which was severely affected by Ian, has witnessed a rise in permit activity as a result of the storm, which is another sign of the effects that post-hurricane construction work is having on the sector.
According to Tim Engstrom, a county spokesman, the issuing of nearly 500 permits daily at the end of May is roughly double that of the daily pace that had been in January. From October to May, Lee County’s Community Development Department granted more than 61,000 building permits.
According to him, Community Development has hired more temporary workers, hired professionals from other jurisdictions, and used staff from other county agencies to help fulfill the increased demand.
In order for Community Development to add 11 additional personnel in its permits area, including six building inspectors and five customer service representatives, county commissioners approved a midyear budget adjustment earlier this year as well, according to Engstrom.
According to its website, the borough of Fort Myers Beach, which was devastated by Ian, has given nearly 9,200 building permits since October, up from about 2,000 a year prior to the hurricane.
a variety of consumer effects
The builder may occasionally pick up the tab for the additional building costs.
Rey noted that in some circumstances, the cost of the increase to the buyer “could be borne by the buyer,” particularly if certain upgraded or bespoke finish and material options were available.
Practically speaking, she stated that “labor shortages and material delays increase build times and costs.”
In Naples’ Bay Colony, Jose Daniel Capote and Orlando Rubio, on the right, put up shutters on a house.
But there are also additional effects.
“From a customer perspective, these delays can add additional pressure and stress, as they await their new home or commercial business,” added Rey. “This can come in the form of the need for longer temporary housing for home buyers or the delaying the opening of a business.”
vigorous recruitment attempts
The underground utility and site development company’s Tyler Sirois, the director of human resources, acknowledged that it can be difficult to locate applicants with the qualifications his organization needs.
Mechanics, heavy equipment operators, and drivers with commercial driver’s licenses are among the difficult-to-fill positions.
Of course, Florida’s comparatively low 2.6% unemployment rate, which has been the lowest among the nation’s 10 largest states for a year running, doesn’t help, said Sirois, who is also a member of the state House of Representatives.
A visitor to the most recent CareerSource Brevard employment fair in Cape Canaveral is engaged in conversation with Tyler Sirois, director of human resources at Atlantic Development of Cocoa Inc.
There is never a lack of work to be done, Sirois said, adding that finding candidates takes ongoing effort on our part. The difficulty is finding qualified people to perform it.
In order to meet with potential employees for his 40-person company, Sirois recently traveled to Cape Canaveral for a CareerSource Brevard job fair. He described the event as “a huge opportunity for us,” adding that he spoke with a number of potential hires there, but it’s not enough to fill the need.
Many of the firms she works with are having trouble hiring, according to Melissa Byers, a business liaison and apprenticeship navigator with CareerSource Brevard who specializes in the construction and hospitality industries.
For CareerSource Brevard, Melissa Byers works as a company liaison and apprenticeship navigator, specializing in the hospitality and construction industries.
We kind of see that across the board, so we absolutely need to ride out this wave, Byers said.
According to Byers, one problem is that many baby boomers are retiring and fewer younger workers are replacing them.
Some people, she said, don’t want to begin in a lower-level position and work their way up; for instance, in the HVAC industry, they don’t want their first job to require crawling through warm attics before they can gain enough experience to be promoted to become a technician.
Immigration policy increases shortage
Florida’s Senate Bill 1718, which went into effect on July 1, is a new immigration law that makes an already challenging situation worse.
The bill, which Gov. Ron DeSantis signed in May, broadens penalties for employers who fail to comply with the verification requirements, including the potential suspension and revocation of employer licenses. Among its provisions is that private employers with 25 or more employees must use the federal E-Verify system to confirm the employment eligibility of their new employees.
Additionally, it strictly prohibits the issuance of identification documents to unauthorized residents, nullifies out-of-state driver’s licenses issued to them, and mandates hospitals to gather data on the costs of their medical care and submit a quarterly report to the Florida Agency for Health Care Administration (AHCA).
According to Sellick of Stock Development, the regulation might make things much worse for subcontractors who risk losing staff as a result.
There is clearly anxiety about it, he said, adding, “Time will tell.”
Thomas reasoned that because workers on subcontractor crews more frequently migrate from company to company, any direct impact would likely be on subcontractors rather than builders or general contractors, citing roofers, drywallers, painters, and air conditioner installers as examples.
Construction is already facing a severe labor shortage, but according to Manuel Lievano, CEO of Miami-based MCC USA Global Workforce Solutions, many undocumented employees have started fleeing Florida due to the new rule.
They are having such a difficult time, said Lievano, whose company matches foreign workers seeking permanent citizenship in the United States with U.S. businesses who are experiencing a labor shortage.
The price of construction projects, he claimed, “is going through the roof.”
Supply and demand, plain and simple, Lievano remarked.
Costs and scarcity of materials
The cost of concrete has dramatically increased, according to Michelle DePotter, chief executive officer of the Florida East Coast Chapter of Associated General Contractors, and the acquisition of electrical switch gears can take up to six months.
A house in Naples’ Bay Colony is being wired by Carmelo Raphael.
Both the corporate and public sectors are impacted by these problems, according to her.
In the home market, “disruptions in the supply chain would daily require product substitutions for Viera Builders and our customers throughout the pandemic,” Rey added.
Although supply-chain problems have significantly improved over the past six months, the availability of products has not yet returned to pre-pandemic levels, according to the expert. “Builders are still dealing with backordered and discontinued items, causing material delays,” she said.
The majority of our substitutes, she continued, are due to manufacturers discontinuing their items, not to delays in production or delivery. At the moment, high-efficiency HVAC equipment, countertops, flooring, and appliances are our most underdeveloped materials.
Rey noted that some building materials, like windows or cabinets, can take several weeks to arrive.
“The availability of specific long-lead products also changes suddenly,” she added. “For instance, we faced a shortfall on garage doors, and had to install alternate, temporary doors until those arrived. There was no recognized reason for the shortfall.
In order to accommodate consumer demand, Viera Builders always looking for new suppliers.
Additionally, it keeps a constant eye on the market to try to spot any impending shortages so that it can coordinate closely with its purchasing and materials management teams to get as far ahead of them as possible.
“We put processes in place to order these items at the start of construction,” Rey said. “When windows were experiencing delays, we did so.” In order to better effectively meet demand when it arises, “we have also increased our inventory of products with volatile availability.”
Others concur that supply-chain problems have significantly subsided this year.
Overall, the materials have improved, according to Sellick of Stock Development. You essentially “go in spurts”
The secret, according to Sellick, is to control consumers’ expectations by outlining how long construction might take from Day 1 onward so they are not taken by surprise or disappointed.
Looking for potential answers? beginning in public schools
Some builders, including Suffolk building Co., are experimenting with high-tech methods to assist alleviate the building cost squeeze.
According to Suffolk Florida Gulf Coast President Pete Tuffo, “Construction has historically been averse to technology and innovation because few builders have the capital to invest significantly in research and development, and many are not convinced there is a return on that investment, even as building designs have become more sophisticated than ever.” However, the company is using “some of the most advanced tech tools in the industry, including virtual reality and modifiable buildings.”
Thomas suggested a few additional strategies that could be used to deal with Florida’s rising construction costs:
Bulk purchase, so-called “value engineering” of project design, and long-term supply agreements are used in collaboration to identify cost-saving opportunities.
Processes for obtaining permits should be simplified to save time and money by reducing administrative burdens and delays.
providing local government incentives to help offset building expenses, such as tax credits, subsidies, and lowered impact fees.
Working with public schools, organizations, and others to concentrate on identifying and developing fresh talent is one important requirement to assist ease the construction worker shortfall.
Rey noted that “fewer and fewer people are choosing skilled work as a career option. “Many leaders in the construction sector are working within their communities and school systems to provide educational and training opportunities to those entering the job market in order to bridge the gap in staffing our trades in order to address this situation,” says one leader in the sector.
Four high schools in the Brevard School District provide building construction trade programs, and one of them includes a curriculum that is expressly designed to teach people for the heating and air conditioning sector.
In the 2022–2023 academic year, these programs had roughly 600 participants overall. The curriculum will grow during the course of the following year due to the launch of a carpentry program at another high school.
Some of the district’s middle schools also offer beginning construction-related programs.
The Brevard School District works closely with its business partners in the construction sector to build the curriculum to meet the needs of students and prospective future employers, according to Rachel Rutledge, director of career and technical education.
According to Rutledge, “we try to match the course with the need, to prepare students for their futures.” “They are well-equipped upon program completion.”
Another potential opportunity for workforce development, according to Rey, is to hire more women and retrain potential workers who are leaving the military or searching for a career change.
It is essential to increase public interest in the construction sector.
We have a severe scarcity of labor because of how rapidly our state is growing, according to Rutledge.
And if nothing changes, “the gap will continue to widen,” she added.