Three Tips to Mitigate Rising Chicago Construction Costs
Chicago’s apartment development trajectory continues to rise but with an important limited resource – construction labor. A dwindling labor pool in combination with rising material costs has escalated construction costs for Chicago apartment developers. Cubed Construction, a Chicago construction company and sister company to 33, employs three main strategies.
HOW TO MITIGATE RISING CHICAGO CONSTRUCTION COSTS AND KEEP COSTS LOW
- Keep good talent busy year around: With a limited number of resources in the labor pool, we make sure our skilled tradesmen are kept busy during construction lulls. Through our property management operations, we are able to deploy our tradesmen on maintenance work that arises year round. This allows us to keep our highest performing tradesmen employed during periods when our competition is forced to let their people go. This efficient utilization of talent passes value on to both our construction and management clients.
- Leverage volume construction to achieve significant buying power: Through our high volume / low cost construction program where we’re renovating as many as 50 apartments monthly, we’ve centralized our materials procurement to a few reliable vendors. We partner with vendors that cut out the middle man so we can purchase directly from material suppliers. In some cases, we’re arranging container shipments of materials (cabinets, trim, doors, etc.) directly from foreign manufacturers. This materials buying program gives us a unique advantage, especially in the volume renovation space that is typically flooded with “mom-and-pop” subcontractors.
- Focused upgrade plans: Our 10+ years in multi family renovation, management and leasing has provided us with unique perspective on how to maximize returns on construction investments. We counsel our clients on limiting unit overhauls when not necessary. Many times a simple kitchen and bath upgrade combined with some new paint and floors can lead to over 15% returns. Unnecessary renovation costs may never be able to be recouped and we make sure to advise our clients accordingly.
We specialize in the renovation of multi-family and mixed use buildings, formulation and execution of large capital projects and retail/office build-outs. Our mission is simple; we are dedicated to optimizing real estate value through focused construction strategies.