Developers Struggle to Meet Deadlines Amid Higher Costs, Shipping Delays

Demand for warehouse space remains historically high, but developers are struggling to complete construction projects on time due to increased material costs and shipping delays, according to a new report from CBRE. Construction completions are down 6.1 percent year-to-date, despite an under-construction volume of 432.6 million square feet in third quarter, a record high.

While demand is driving new projects to launch, escalating costs and shortages of materials such as steel, curtainwall and rebar are causing many developers to delay projects after breaking ground. Stalled projects spiked to 213 in second quarter, up from 66 in first quarter, according to CBRE EA Supply Track. However, construction deliveries showed some signs of a rebound in third quarter, increasing 36.1 percent quarter-over-quarter to 79.3 million square feet, providing recent relief for tenants.

Despite the slowdown in deliveries, the market remains on pace for another record year. Transaction volume is up 48.4 percent year-over-year as of August, says CBRE.