FC Dallas President Dan Hunt said he has not seen this many construction trucks driving through Frisco since before the recession of 2008.

“It goes to our vision that Frisco would eventually be the spot—and maybe even the epicenter—of [development] in the Metroplex,” Hunt said.

Construction projects worth billions of dollars are taking shape throughout the region, and as the number of projects continues to increase, so do construction costs and labor demands.

Randy Pogue, a professional engineer and Dallas-Fort Worth commercial market leader for Westwood Professional Services, said corporate relocations are continuing to drive a need in the local construction industry—for both commercial and residential projects—which is in turn increasing final project costs.

The effect of the competitive construction market can be seen locally. The cost of developments in Frisco’s $5 Billion Mile has increased an estimated $1.3 billion in part because of rising construction costs, said Jim Gandy, Frisco Economic Development Corp. president. And though the cost of renovating Toyota Stadium has not increased, the project has been scaled back to keep it within its $39 million price tag.

Pogue said a limited workforce leads to an overall cost increase for all facets of a project, including increases in materials cost, labor rates and overhead. 

“The cost increases are generally somewhat cyclical due to the supply-and-demand side of the equation,” Pogue said. “I would expect that there will be another correction sometime in the future, but for now there is a mindset to attempt to make hay while the sun is still shining. For now and the immediate future, it appears that this market is here and will continue.”

According to a report released by the Associated General Contractors of America, two-thirds of construction firms nationwide report they are having a hard time filling hourly positions that represent the bulk of the construction workforce.

Meloni McDaniel, president and CEO of Texo, the largest commercial contractors association in Texas, said the effect of the insufficient labor market can be seen in North Texas as construction companies vie for both skilled and common laborers.

“People are trying to [entice workers to leave current jobs] for 50 cents to $4 more an hour just because they just need the bodies so much, and they can afford it because they have so many projects,” she said. “It really is just a simple supply-and-demand equation, and right now the demand is high.”

Commercial projects

Toyota Stadium officials scaled back construction on the $39-million Toyota Stadium improvement project to fit within its original cost estimates. The project includes adding the National Soccer Hall of Fame—which will be the first time a sports hall of fame would be attached to a stadium—renovated locker rooms and a private club. Construction costs for the project jumped from an estimated $350 per square foot to $511 per square foot in August, Hunt said.

“The market is really tight right now,” he said. “That goes without saying. All you have to do is look around at all the building that’s happening. Sometimes we couldn’t get the number of bids we wanted on a job because everybody’s plate is so full with work.”

Hunt said the industry does not have enough workers.

“You’re actually having to look outside the Metroplex sometimes for different trades to get work done,” he said.

He said though the Toyota Stadium project has been scaled back, it is a blessing in disguise.

“The major change in the hall of fame, though, for us is we’re frankly getting a much better design that is a lot more efficient and ensures, I believe, a much higher museum viewership,” Hunt said.

For the $5 Billion Mile, several factors play into the projected total cost increasing to $6.3 billion, including the increased cost of labor and materials and an increase in the projected investment in the $5 Billion Mile’s four mixed-use developments, Gandy said.

“Some of the plans are being modified for the facilities in the $5 Billion Mile that could end up being larger than originally planned,” Gandy said.

Gandy said he expects the projected cost of these developments will continue to increase as they reach build-out.

Residential projects

According to the 400 members of the Dallas Builders Association who took part in a recent survey, the residential construction industry is also desperate for workers, more specifically for framers and brick masons.

“We have more demand than we did prior to the recession, and a lot of the labor we had at that time is in a different industry,” DBA President Phil Crone said.

Crone said one residential builder surveyed said the labor shortage added a minimum of three months to his construction schedule, adding that a good day was one in which crews were present on four of his nine homes under construction.

Crone said the results of the labor shortage are costing builders and homeowners alike. Study results released on Sept. 26 showed 80 percent of DBA builders surveyed said the labor shortage was adding at least $4,000 to the average home price, and 50 percent of builders surveyed said the labor shortage is adding two months to construction timelines.

Labor outlook

According to the Engineering News Record, a magazine that provides news, analysis and data for the construction industry, labor costs continue to rise throughout Texas and the U.S.

McDaniel said the Dallas-Fort Worth and Austin areas are the fastest-growing areas in the country, and right now the  workforce is extremely limited.

According to the AGC, in a study conducted between July 2015-July 2016, the number of construction workers in Dallas-Fort Worth did not change despite the number of new construction projects taking place in the region.

“Right now our subcontractors are squeezed for people,” McDaniel said. “So the general contractors who have tight deadlines are dependent upon them to make those deadlines, and they just don’t have the people to make it happen.”

McDaniel said nationally by 2018 the construction industry is projected to be short 900,000 skilled laborers.

“Our industry took a big hit during the recession, and we are definitely not recovering from it,” she said. “I know a lot of people who have left the architecture and construction industry because there wasn’t enough work, and they have still not returned to the industry. This is going to create a huge gap.”

McDaniel said the commercial market is pulling workers from the residential market, causing the residential market to pull from other industries as well, which she said is unsustainable for the entire construction industry.