Construction costs rising in Mecklenburg County
“It’s been a very challenging construction period..”
CHARLOTTE, N.C. (WBTV) - Rising costs are hitting every aspect of life right now, not only across the country but right here in Charlotte.
The cost to build homes and office towers across the city is skyrocketing year-over-year as seen through the number of building permits issued.
Experts point to the pandemic for starting this wave of higher costs that has trickled down through every aspect of our economy.
Ryan Schooler of Charlotte said, “It seems like prices keep increasing.”
It’s a fact, prices are increasing, especially for people renting, buying, and building in the Charlotte area.
“It’s been a very challenging construction period for those developers in 21 and 22,” said Antoine Dennard, a partner of Quore Real Estate Advisors.
Kenneth Bell, the president of KB Holdings Construction Development said, “COVID really started really inflated prices for construction, for a lot of different materials and that was really the start of it, and now inflation after that has kept prices kind of high, so it’s been probably about 2-years now.”
WBTV obtained data from Mecklenburg County about the number of building permits issued which includes all construction in the county ranging from repairs, additions, alterations, and renovations.
Building Permits Issued by Mecklenburg County Code Enforcement from 2018 to 2022:
|Construction Type||Permits Issued||Construction Value||Permits Issued||Construction Value||Permits Issued||Construction Value||Permits Issued||Construction Value||Permits Issued||Construction Value|
According to Mecklenburg County Code Enforcement, the construction value increased from $5.9 billion in 2018 to $8.5 billion in 2022.
Mecklenburg County Code Enforcement said “We have no evidence that the rising cost of construction in Mecklenburg County differs from the national drivers – increase in building material prices and decrease in availability, inflation, rising labor costs and rising interest rates, among others.”
“Unfortunately, most of that is passed down to the consumer, so the rising prices here in Charlotte, a lot of that had to do with COVID, of course the number of people coming here and then also the shortage of houses,” said Bell.
As prices for construction projects have increased, permits issued for projects in the county have decreased, dropping from 113,040 in 2021 to 108,830 in 2022.
Bell said, “we’re kind of slowing down to see what’s kind of going to happen next.”
Schooler added, “I do understand it from a budget perspective but if things are becoming more expensive and there’s less options if you will, I kind of feel like that’s passed down to the consumer, aka, the regular person and it makes me wonder when I will get a break?”
The county said “We believe that the increased number of residential permits from 2018-2021 represents the burgeoning housing market that we experienced nationally, along with home improvements and repairs, which increased during COVID-19. But permit numbers can naturally vary some from year to year, as contractors have some choices about how they choose to permit a project, depending on complexity.”
While construction costs were high for much of 2022, things did change during the fourth quarter of 2022.
Dennard said, “we’re definitely seeing a decrease in construction costs, but overall, they seem higher that what we’re used to.”
Experts tell WBTV Charlotte will likely see more development costs because of a softer market as developers wait on interest rates and supply cost to drop.
“I think it will be business as usual a little bit longer, hopefully at just at a lower cost,” said Dennard.
Developers are hopeful interest rates will go down and things will start to pick back up around the middle of the year.
Although there is a decrease in the number of building permits issued in Mecklenburg, developers tell WBTV this is a strong market so we will continue to see construction projects.
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