Northeast Florida experts share their insights into the commercial real estate market at the end of the 2nd quarter of 2022.
By Brandon Hurd | President & Founder, BHRS Companies
Construction project management and contracting within the retail, restaurant/food service and office sectors throughout the state of Florida, especially in Northeast Florida, remains in great demand.
Owners are feeling the pinch of continuously rising project prices fueled primarily by construction labor shortages and supply chain disruptions.
Some original equipment manufacturers we work with are 10-14 months out for certain new equipment critical to these commercial operations.
Completing construction in this case without the needed equipment is not helpful.
The desire to open as quickly as possible while trying to balance the optimum cost is a real challenge. But our backlogs and program commitments continue to increase well into the next few years.
I remain optimistic so long as money remains available, and the project costs continue to be supported by the business model.
Short-term we may see some slowdowns or suspensions of work, but mid- to long-term I see the growth line continuing to rise.
More than ever, we are seeing the forging of strategic, trusted partnerships between owners, designers, contractors and key suppliers who all are bearing down and performing as best they can in these conditions.
We’ve come up with a few different procurement strategies from bulk ordering and consolidating, ordering used furniture, fixtures and equipment and in some case temporary FF&E simply to get the locations operating and generating revenue.
No longer is “cheap and fast” a motto. Today it’s not cheap, and it’s not going to be fast. Your project team has to be versatile and prepared.
Many smaller scale and novice owners fail to appreciate construction can be half of a project’s cost, and usually the easiest part considering the entire project’s life cycle.
The critical path to a successful project in this environment is not always breaking ground. It’s often way before that.
With a well laid-out strategy, some patience and disciplined execution the scaling brands can gain some efficiencies with opening dates and minimizing the potential for rising costs by negotiating and committing to these strategic stakeholders early in the process.
Brandon Hurd is the 2022 NAIOP Commercial Real Estate Development Association Northeast Florida Chapter Programs Chair.
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