{"id":14235,"date":"2023-03-16T02:10:46","date_gmt":"2023-03-16T09:10:46","guid":{"rendered":"https:\/\/essential.construction\/news\/how-multifamily-builders-are-getting-ahead-of-inflation\/"},"modified":"2023-03-16T02:10:47","modified_gmt":"2023-03-16T09:10:47","slug":"how-multifamily-builders-are-getting-ahead-of-inflation","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/how-multifamily-builders-are-getting-ahead-of-inflation\/","title":{"rendered":"How multifamily builders are getting ahead of inflation"},"content":{"rendered":"

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While Bozzuto Construction Co. is active across the Northeast, the contractor is looking to expand its presence in the Greater Boston market, according to a press release shared with Multifamily Dive.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

To that end, Greenbelt, Maryland-based real estate firm Bozzuto\u2019s construction arm has promoted Brian Rennie, a 12-year veteran of the company, to vice president overseeing projects in the Boston area, as well as renovation and capital improvement projects in Maryland, Virginia and Washington, D.C.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Previously a director, Rennie is optimistic about his new role, despite ongoing market and supply chain difficulties that the firm will need to out-maneuver.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

“We have a lot of great partnerships that we’ve created in the Boston market who are very optimistic about what the future holds \u2014 both national partners and local partners in the region,\u201d Rennie said. \u201cAnd for us, and what we see in the future, the subcontractor market is ready to support the growth that we see.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Here, Rennie talks with Multifamily Dive about the Boston market\u2019s potential, the impact of supply chain shortages and the role technology plays in the building process.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

This interview has been edited for brevity and clarity.<\/span><\/em><\/span><\/span><\/span><\/span><\/span><\/p>\n

MULTIFAMILY DIVE: What are the greatest challenges in the multifamily construction sphere right now?<\/span><\/span><\/strong><\/span><\/span><\/span><\/span><\/p>\n

BRIAN RENNIE<\/strong>: I think everybody knows that the past two years have been challenging. From the pandemic and some of the challenges that created, to the hyperinflation we’ve seen over the past 12 to 24 months and what that’s done to the industry \u2014 whether it’s material lead times or labor shortages or cost escalation \u2014 it’s been a really challenging time to build.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span>\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

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Brian Rennie<\/p>\n

Permission granted by Bozzuto Construction<\/p>\n

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Looking back over the past year, we’ve seen anywhere from a 15% to 20% increase in construction costs. This is four to five times what we would typically see annually. So as we’re going through pricing exercises, trying to get a project to close or trying to get a buyout completed, it’s created a significant challenge for us.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Similarly, lead times for particular materials, whether it’s roofing materials or electrical switchgear, has gone from a fairly reasonable amount of time to two, three, four times longer than you were planning.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

How do you plan to handle them?<\/span><\/span><\/strong><\/span><\/span><\/span><\/span><\/p>\n

I\u2019m really proud of what we’ve done as a company to try and get ahead of all that and be successful in the projects that we’re working on. We’ve taken this as more of an opportunity to dig in and show some of our grit to be able to get ahead of these challenges and be successful on deals.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

We’re taking a look at our subcontractor backlog to make sure that they can actually staff the projects that we’re putting them on, and we’re making sure that when we’re in construction,\u00a0 the projects are ready for each subcontractor when they get on the job. We’re also pre-planning ahead of construction with our development partners to release any materials that have long lead times ahead of the financial closing. We need to make sure that we’re being effective and delivering material timely on the project.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

And then we’ve done a really good job with our project management teams of buying out our projects very, very quickly. The earlier we’re able to buy those out, the sooner we’re able to prevent a cost escalation, which could be a detriment to the project.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

What are some process improvements you plan to make?<\/span><\/span><\/strong><\/span><\/span><\/span><\/span><\/p>\n

We’re always looking to get better. I think we’ve done a really good job over the course of my career at Bozzuto of continually trying to improve, to make ourselves a better partner to work with.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

I think a lot of things that we’re focused on now are just getting back to the basics, some of our effective operations. If you look over the past two years, what’s happened in the market, it’s been a very unusual situation, and people have tried to field ground balls that they never had to deal with before.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Moving forward, I think a lot of those challenges are going to subside. We’re optimistic that the market is going to settle.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n