Skyrocketing construction material costs have been front-page news in recent months. Tamara O’Neill Moreland moderates a wide-ranging discussion with Ari Parritz, Managing Principal of Afton Park, and Chris Osmundson, Director of Development at Alatus, on the many trends in construction that are changing the development of projects now and into the future.
Developers have been dealing with substantial cost increases over the past year and some increases, such as lumber, have gone off the charts for periods of time. As a result, developers have been engaging in “value engineering” to reexamine ways to keep costs in line. In addition to a great deal of collaboration with all parties involved in a project, developers have been reconsidering construction methods, the elimination of features (e.g., parking spaces) and the use of financial instruments to keep a project moving forward.
There is a nationwide shortage in housing. Both Ari and Chris agreed that there simply hasn’t been enough housing construction in the country in the past few years. Workers who now have the flexibility live anywhere, are experiencing a shortage of housing everywhere.
Chris and Ari applauded efforts to promote wage growth, something they felt was long overdue but noted that affordable housing is not getting any easier to build especially with the required lower rental rates mandates in some cities. While neither felt that there would be long-term cost problems with building affordable housing, both felt that a rent increase could be likely.
Community involvement in construction is very different today than it was in the past. Today, it is essential that all voices in the neighborhood be heard. Developers need to disclose project costs, likely revenue, expenses and profit margins. Developers must also make it clear to community groups that a project won’t be completed if demands for features can’t be accommodated in the budget.
To learn more and watch the full Bisnow Minneapolis Construction and development webinar, go to: https://www.bisnow.com/webinar/minneapolis/construction-development/minneapolis-construction-development-update-7028.
Tamara O’Neill Moreland advises clients on complex litigation involving land use, environmental issues, construction, real estate and appellate advocacy. For over 20 years, she has litigated cases to successful conclusions against city and state agencies in state and federal court and successfully handled a wide variety of appeals. Tamara is a Minnesota State Bar Association Board-Certified Real Property Specialist, was named to Best Lawyers in America in 2020-present for Land Use and Zoning Law and has been chosen by her peers as a Super Lawyer for many years.