Dave Balent is seeing big impacts from the surging price of steel. Balent, owner of Balent Construction in Exeter and past president of the Home Builders Association of Northeastern Pennsylvania, said the high price of steel is part of the reason he recently lost a bid to construct a commercial building in West Wyoming. He didn’t win the job because the price of materials jumped by about $25,000, he said. The cost of steel studs he uses to construct homes and commercial projects have more than doubled in price, he said.
He is paying higher prices for steel and diesel fuel at the same time that the price of lumber jumped by more than 200% since last year and home prices have hit record highs.
As a result of the high prices, construction activity is starting to slow as some people are putting off building their dream homes, he said.
“People don’t have the money to continue on and people who have it are going to run out,” Balent said. “No one has a bottomless pit of money and I have to take a hit on some of it just to continue working.”
Prices for U.S. hot-rolled, coil steel, the most widely produced finished steel product, have spiked almost 270% since bottoming out last August and recently hit a record high of $1,616 per ton, according to S&P Global Platts.
Balent and other contractors also are seeing reduced supplies and delays when trying to get steel and lumber. Sometimes, he said suppliers don’t have it and he needs to stop at five different places.
“I’m constantly running from supplier to supplier to get what I need to complete a project,” he said.
Balent said he believes tariffs, a labor shortage and high demand will continue to impact the price and supply of steel.
President Joe Biden has not removed tariffs that former President Donald Trump placed on European steel.
Real estate developer Chris Gilchrist said he paid a high price for steel as he constructs a building on North River Street in Plains Twp. that will house some employees and equipment for the state Department of Environmental Protection’s Bureau of Abandoned Mine Reclamation. Tariffs imposed years ago have increased the price of steel, he said.
“It has caused some budgetary issues,” Gilchrist said.
Gilchrist, who owns 39 City Market and Cafes, Convenient Food Mart convenience stores and G&G Express Marts in Luzerne, Lackawanna, Susquehanna, Carbon and Monroe counties, expects the price of steel will stabilize by the time he starts constructing a new mixed-use building in Moosic.
He purchased the former Lackawanna County Visitors Center at Montage Mountain in Moosic from the county for $1.25 million.
He also is purchasing the two-acre lot next to the visitors from Hemingway Development where he intends to construct a 30,000-square-foot mixed-use building.
A medical tenant, that he would not identify, has expressed an interest in occupying space in the building, he said. He also is considering putting a City Market in the building and he is looking at retail developments and possibly loft apartments on the upper floors.
Jim Cummings, vice president of marketing for Mericle Commercial Real Estate Services, said since the high price of steel is a national problem, Northeast Pennsylvania is not at a competitive disadvantage and everyone is in the same boat for the most part.
Cummings said Mericle is in better shape than other developers, however, since they ordered steel for current construction projects before prices hikes and delays became problems.
Additionally, Mericle recently constructed numerous buildings on speculation and still has a variety of available spaces to keep up with tenant demand, Cummings said.
Mericle constructs spec buildings of various sizes through its “Ready To Go” program to shorten the time it takes businesses to move into industrial, office or medical space.
Among its projects, Mericle is constructing a 217,000-square-foot spec building in CenterPoint East in Pittston Twp. that is about 70% complete, he said.
Cummings recently attended an event with commercial real estate brokers and developers and he said a consensus was reached about the rising cost of steel and delay in getting it for construction projects. The consensus was that the rapid growth in the e-commerce sector is a big factor causing the high prices of steel and delays.
“The group felt that the country’s largest national retailers and overnight delivery companies and the companies that are involved in their supply chains are growing at such a rapid pace that they are consuming steel almost as fast as it can be manufactured,” Cummings said.
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