Leading Question

By Hannah Wallace August 31, 2009

›› Substantially, say builders and their clients. Lack of work has brought down the costs of labor and materials. Steel is down nearly 40 percent to 50 percent from a year ago, says Jeff Charlotte, president of J.E. Charlotte Construction Corp. and chairman of the Gulf Coast Builders Exchange. The steel subcontractor on the third phase of a project he’s building, for example, bid $225,000 at the end of October 2007, but the price had dropped to $140,000 in July 2009.

Charlotte and others have noticed a 20 percent to 30 percent decrease in other materials and labor, too, due to lack of demand as well as subcontractors and material manufacturers cutting profits to remain competitive. 

“It’s a function of a lot of capacity and no demand, or very little demand right now,” Charlotte says. “The private sector is frozen [because of the credit crunch]. That’s the biggest issue in the marketplace right now. My clients can’t get financing. It’s possible for those with cash to construct a project for costs that are lower than they’ve been in nearly two decades.”

John Cannon, owner of Sarasota-based John Cannon Homes, has dropped his prices for custom homes from $130-$150 per square foot to $99 per square foot. He’s seen immediate results, although it’s too soon to quantify the percentage increase in business. Cannon was able to lower the rates by asking his subcontractors and suppliers to do the same to keep his and their crews busy during the downturn.

Government projects also have benefited by the “bargain basement prices,” says Mary Dougherty-Slapp, executive director of the Gulf Coast Builders Exchange. She’s seen projects bid out a year or so ago coming in significantly under budget, as much as 30 percent lower.

Ted Cava, director of pre-construction services for Sarasota-based W.G. Mills, which is the construction manager for Sarasota’s new Riverview High School, says the firm has seen about 23 percent savings on construction materials and labor throughout the project, which began construction in 2006. The construction cost for the school, originally budgeted for $120 million, was trending toward $95 million, at the end of the summer.

Charlotte say this period of lower prices and good deals will last until lending improves in the private sector.

Cava anticipates construction costs staying flat the next three to six months. Much of it will depend whether the federal government’s economic stimulus funds, which will increase the demand for supplies and labor, arrive in a slow trickle or all at once.

“(The costs) could either be a big pop back up or could be a slow and gradual bounce back up,” he says. ■

Filed under
Show Comments