by RON STARNER ron.starner bounce@conway.com

The construction project on Lincoln Legacy One in Plano, Texas, is being managed by Constructors & Associates of Dallas. The 214,000-sq.-ft. (19,881-sq.-m.) building and 189,000-sq.-ft. (17,558-sq.-m.) parking garage will be complete by August. Due to established relationships with key contractors, subcontractors and their building-material suppliers, Constructors is able to finish projects like this one on time and within budget.

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nsurance adjusters hadn't even finished processing claims from hurricanes Katrina and Rita when sharply higher bills for construction projects started reaching the desks of corporate facility planners.
   While building material prices and availability fluctuated constantly in the months following the storms that ravaged the Gulf Coast, the net effect of these changes is certain to impact a wide range of construction projects through most of 2006. Real estate executives can now expect to face higher costs to build virtually any type of commercial structure and longer lead times on quotes and construction.
   Industrial asset managers, in particular, are having to adjust to the aftermath of America's worst hurricane season on record.
   Consider how much these building materials increased in price, from late August to mid-December 2005: concrete, up 20 percent; lumber, up 30 percent; plywood, up 30 percent; plastics, up 7 percent; PVC pipe, up 50 percent; insulation, up 8 percent; gypsum, up 25 percent; copper, up 17 percent; and brass, up 12 percent.
   With price hikes like these, builders and clients alike were left scrambling to fill supply orders and cope with the sudden, unexpected strain on their budgets.
   "If it used to take days to get a construction quote on a building project, it now takes weeks," says Sean Nugent, executive director of Pfizer Global R&D's Global Strategic Facilities Planning in New London, Conn. "If it used to take weeks, it could now take months."
   Nugent is not alone. Site Selection interviewed a wide range of corporate real estate directors, site selection consultants, brokers and builders and found that nearly all of them had been affected in some form by either building material shortages or construction cost increases since August 2005.
   While the impact varies from region to region throughout North America, several trends have taken hold throughout the industry:

• Delays in securing construction quotes are now the norm, rather than the exception, as building-material prices in some regions keep rising sharply and seldom stay put for long.
• Overall project costs from building start-up through completion are now considerably higher than they were a year ago; total cost increases of 25 to 50 percent, depending upon facility type, are common.
• Existing buildings have moved to the top of the list for site selectors when considering a new plant location, as costs to rehab a facility are usually lower than constructing a new one on a greenfield site.
• A wave of new building-material-plant construction is cropping up to meet the demand for everything from cement and concrete pipe to plastics and lumber.

   Arthur Murray, associate broker for Lavista Associates Inc. in Norcross, Ga., says he has been shocked recently to see construction quotes for projects in metropolitan Atlanta.
   "I have actually seen quotes that are 100 percent higher for the exact same type and size of building that was built only three or four years ago here in Atlanta," says Murray, who sells and leases large industrial facilities throughout the metro area.
   Most experts who track construction costs and material prices do not expect these costs to stabilize until December 2006.