Springfield Business Journal_2020-11-30

SPRINGFIELD BUSINESS JOURNAL · 1 NEWS NOV. 30-DEC. 6, 2020 $2.00 · SBJ.NET NOV. 30-DEC. 6, 2020 · VOL. 41, NO. 19 High lumber prices drag on contractors  by Mike Cullinan · mcullinan@sbj.net A steep rise in lumber prices amid the coronavirus pan- demic has dealt some unexpected financial challenges for the construction industry, local representatives say. Framing lumber prices peaked in September to an all- time high above $950 per thousand board feet, according to data from pricing service Random Lengths. While the price has since lowered to around $620, as of Nov. 23, it’s still nearly double year-over-year costs, which were near $337 by late November 2019. The pandemic is largely responsible for the lumber price hike, as producers shut down in March and April and supply dropped swiftly, said Sean Thouvenot, vice president at Bran- co Enterprises Inc. However, Western wild- fires in September that impacted Oregon and Washington, where several mills operate, also contributed. “August is when it really hit us hard on some jobs as far as price increases,” Thouvenot said, not- ing around 20% of the company’s projects have wood frames. “But I would say it impacted all of our projects in some form or fashion.” He declined to estimate the companywide financial impact of the price increase, but said its ongoing construc- tion of Hart Eye Clinic in Republic cost roughly $8,600 more for lumber than originally budgeted. “It hit us pretty hard on that one,” he said.  Thouvenot said projects Branco is now bidding account for the lumber cost increase. “But projects that were bid before May are the ones where we’re taking the hits,” he said, adding that included the $6.25 million Mc- Queary Family Health Sciences Hall addition at Missouri State University. “Those ones come out of our bottom line. You can’t very well pass it on to the owner.” Take the hit Construction input prices increased 1.1% year over year in October, largely attributable to softwood lumber prices, up nearly 69% over that same 12-month period, according to trade association Associated Builders and Contrac- tors. Leveling out the pricing input are natural gas, unprocessed energy materials and crude petroleum that are down substantially since 2019. “It kind of caught us off guard,” said Bussell Building by Christine Morton · cmorton@sbj.net While historically low interest rates might be the leading incentive to buy a home right now, renters have quietly taken majority status in Springfield over the past decade. According to an analysis of U.S. Census Bureau data by internet listing service RentCafe, Spring- field’s renter growth rate 2010-19 was second in the nation, behind Waterbury, Connecticut, and it was the only Missouri city to shift to more renters than buyers in that span. Springfield’s renter rate was 59% in 2019, representing an in- crease of nearly 11 percentage points and some 21,000 renters from 2010. The report covers 23 cities, with at least 100,000 residents, where renter rates overcame ownership figures during the time period. It’s a sign of growth, said Matt Morrow, president of the Springfield Area Chamber of Commerce. He attributed the increase to the student popula- tion. With three universities in the city – Missouri State, Renters overtake homeowners in city Tyler Bussell is surprised lumber prices hit such a high level this year. Matt Morrow : Rental report is a sign of growth within the city. JESSICA ROSA ADDING UP Branco Enterprises’ Sean Thouvenot says the lumber budget has increased by nearly $9,000 for an eye clinic job in Republic. PRESENTEDBY A L O O K I N T O S E A S O N 1 See LUMBER on page 28 See RENTERS on page 29 Report: Springfield’s rental growth rate is second fastest in nation over last decade Builders predict costs will remain elevated well into 2021