Construction Labor Shortage Continues to Plague SNF Projects

A shortage of labor in the construction industry, as well as the rising cost of commodities, continues to play a tremendous role in senior living construction costs, including SNFs, according to recent data from Des Moines, Iowa-based design and construction firm Weitz.

Overall rising costs have plagued senior living projects in virtually every region of the country, with increases averaging between 4-6%, according to Larry Graeve, who prepared the firm’s summer 2017 Senior Living Construction Costs brief.

Raw materials like lumber and steel are in higher demand; asphalt, on the other hand, is trending lower, wrote Graeve. While the need for certain resources vary by region, one commodity is in constant demand.

“The labor shortage remains a common theme in virtually every market, and these conditions are expected to continue for the near term,” said Graeve.

The labor problem has remained persistent since the beginning of the year, when various sources hinted that 70% to 80% of contractors were challenged with finding qualified labor to man construction projects, Graeve wrote in his January 2017 brief.

In his report, which is published twice per year, Graeve factors in general conditions, insurance, taxes, bonds, and other fees to calculate the cost of a senior living construction project, based on a national average.

For summer 2017, the price of mid-level SNF projects range between $193-$227 per square foot, up from a range of $189-$224 in January 2017. Mid-level projects are typically wood-framed with standard amenities and finishes, according to Graeve.

High-level SNF projects — those made from steel or concrete, featuring high-end finishes and luxury amenities — range between $246-$313 per square foot in summer 2017, up from a range of $241-$311 in January 2017.

Written by Carlo Calma

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