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due to construction/labor costs
Quote:
The latest project being "re-evaluated" is Cass and York, a development by Detroit-based The Platform LLC, which planned 56 luxury condominiums plus apartments and a parking deck at that TechTown neighborhood intersection as part of a broader plan that also includes a renovation of the former Wayne State University criminal justice building at 6001 Cass Ave.
Skilled trades shortage is hammering [[pun intended) developers' budgets. Can't make money at $450/sq ft? That's unheard of in this market. Are in-demand construction firms gouging or are they actually having to raise wages in order to find scarce skilled workers?
Because of demand the whole country is suffering from a skilled trades shortage,a lot of workers jumped over to the oil shands money and never looked back.
There have been a lot of projects put on hold,I wonder if the requirements of new construction must contain 20% affordable houseing is putting a damper on things.
It would on high end projects.
Developers until you get buyers, do not develop our hood. Waste of your time and a waste of your money!!!
Trump's tariffs aren't helping things either.Quote:
Originally Posted by Richard
When are they supposed to kick in?Quote:
Originally Posted by 313WX
I was paying $189 for a 4x10 22 gauge stainless steel after he took office it has been $128,other prices have gone up because of demand,including mine.
China has agreed to drop tariffs against the US.
Everybody I know in the trades,self employed is backed up at least 90 days,I am consulting on a restaurant opening and it has taken over 5 months to get electricians,plumbers,A/C contractors etc. coordinated and it is not even a major project.
The price of cement has gone up by about 40% in the last 2 years.
It depends.Quote:
Originally Posted by Richard
Generally, when it comes to business transactions, they would be reflected in the costs at the beginning of the following year after being imposed, or whenever the commercial contracts are up for negotiation.
If a contract was negotiated prior to the tariffs being imposed, the cost to the end user would already be locked in and the supplier/vendor would be forced to eat up the expense.
My steel supplier who also supplies the shipyard will not gaurentee a set price over 10 days.
My little indicator is the price of scrap,last time when there was high demand the price of scrap metals was through the roof,now the price of scrap is at the bottom but the cost to purchase the product new does not reflect that,which means that it is not a demand or supply issue,only a it’s time to make bank issue.
To me anyways,we went through 8 years of slow growth and are now seeing a sort of pent up demand,everything from food costs to construction materials have gone up,but not really because when I look at the 2006 books we are paying the same prices as back then.
When the recession hit people had to lower costs and forgo profits in order to keep the doors open,now costs are rising because everybody is trying to re coup those profit margins.
It is a trickle effect but based on what the market will bear,I have increased costs in supplies and materials so I increase the costs on my end,people are still paying it and actually offering more in order to be moved further up the waiting list.
Costs will continue to climb until it reaches the point where people are reluctant to pay and then we go back to the correction and do it all over again.
The trades were always hard to find help in,but what made it even worse now is during the last recession many just moved on into other fields and have not returned,the last downturn left a bad taste in many mouths.
Here in Florida it became even worse because others,immigrants,were willing to work for less so the big contractors started paying skilled trades less,It is not uncommon to see a apartment complex being thrown up with 95% of the workforce being Latin American or Mexicans.
But seriously would you as a skilled electrician go work for $15 per hour when you can go work non skilled flipping burgers for $15 per hour in the A/C.
They do not lower the price of the house or apartment building and are really not particularly concerned about quality and it is not uncommon to find a 3/4 inch gap in a bedroom door across the top.
Most skilled workers take pride in thier work and it is tough to handle when being asked to slap something together for $15 an hour.
Demand has a lot to do with it but also the younger generations are not entering the fields replacing those who are leaving,even in the machine shops or fabrication shops the adverage worker age is mid 50s.
Can you imagine what would have happened if Amazon had actually picked Detroit,very little else would have gotten done.
Which even brings up how this will impact your new free bridge construction,it is supposed to be a split labor supply aspect.
This is sad news but an indication of what's really going on in and around the city. There is demand for new housing and current jobs are being delayed by months and years. The new construction cost will certainly have a positive effect on current inventory. IOW, I think we're in for another year of massive double digit appreciation.
PS. I don't see the same effect in the suburbs. Wonder why.
Not saying where I found this note but it is telling.....
One reason is because the regulatory costs are much less.Quote:
Originally Posted by SammyS
Also, suburban projects in general tend to be more cheaply built, as they're intended to be targeted towards buyers seeking affordable living space.
A premium luxury price at a less than premium location explains why only 10 of 56 pre-sold. They need better sales to get financing and shovels in the ground. New center is warming up, but $450 a sq. ft. luxury hot? No not really. The old adage of location is always in play, that’s why they say it 3 times. Yes, construction cost are higher than 3 years ago, but I think the Platform missed the correct market on that lot. Hopefully they have another idea in mind.
How long were they pre-selling for? This was City Modern in June 2017 [[~3 months into it). About 30% sold at the time.Quote:
Originally Posted by ABetterDetroit
I’m not sure exactly how long it was. They had units on the market at about the same mid 2017 time frame. Back then you needed to make an appointment to go in and get the sales pitch. Later, sometime in ‘18 they opened a sales office in the Fisher Building where they had a model of a unit that you could walk through with open hours including weekends. The model was beautiful. High end throughout. The smart room tech they were planning to make available in those units was impressive.Quote:
Originally Posted by SammyS
These were up on the MLS since February and March of 2018. Hopefully the Platform can come up with a new plan for the site that works. This is an important location to add density.