North America Industrial Construction Cost Guide 2023

Construction Timelines: Cushman & Wakefield’s construction contractor sentiment survey indicates that material lead times and project execution timelines continued to increase in the last six months. Of contractors responding, 44% believe that lead times had remained constant (38%) or decreased slightly (6%); the remaining 56% of respondents believe lead times increased slightly (38%) or significantly (19%) over the previous six months. Project execution delays have been more challenged. Only 9% didn’t experience increases while 86% saw slight (69%) to significant (19) increases. A recent report from Associated Builders and Contractors points to project backlog increases in commercial construction 2 . As of November 2022, the backlog increased to 9.1 months, the highest level since 2019 Q2, indicating that timelines will remain constrained. Large commercial projects have been a major contributor to backlog increases.

KEY TAKEAWAY Construction contractors expect increased challenges in project execution timelines and material lead times. The vast majority (85%) expect slight (66%) to significant (19%) increases in material lead times. This is marginally more optimistic than sentiment from a year ago when 88% of GCs expected material lead times to increase slightly (36%) to significantly (52%). While the industry may see material lead times easing, significant issues remain with electrical gear and regionally with core materials, such as cement and sand.

2 Commercial, Institutional and Health Care Construction Drive ABC’s Backlog Indicator to Highest Level Since Q2 2019”; Associated Builders and Contractors; https://www.abc. org/News-Media/News-Releases/entryid/19722/commercial-institutional-and-health care-construction-drive-abcs-backlog-indicator-to-highest-level-since-q2-2019; accessed December 16, 2022.

LEAD AND EXECUTIONS TIMES ARE EXPECTED TO CONTINUE TO INCREASE Cushman & Wakefield Construction Contractor Sentiment Survey, December 2022

Decreased Slightly Increased Slightly

No Change

Increased Significantly

100%

19%

19%

19%

22%

80%

38%

60%

66%

69%

72%

40%

38%

20%

6% 9%

3% 9%

3%

6%

0%

Material Lead Times

Project Execution Time

Material Lead Times

Project Execution Time

Past 6 Months

Next 6 Months

Source: Cushman & Wakefield Research

6 NORTH AMERICA INDUSTRIAL CONSTRUCTION COST GUIDE 2023