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Commercial real estate impacted by inflation, staffing shortages

Posted by Jerad Giottonini on March 31, 2022

Mountain West in the news. 

SALT LAKE CITY (ABC4) – Rising construction costs have impacted the residential housing market — but, increasingly, they’re disrupting commercial real estate too.

“The commercial real estate industry is white-hot right now,” said Wes Christensen with Mountain West Commercial Real Estate.

But, he says, supply chain issues and lack of workers are taking a toll.

“The shortages in materials, the shortages in skilled laborers, drive construction costs to points where some deals are no longer making sense to build because they’re getting so expensive,” said Christensen.

One recent example? A spike of 60 percent — in just the last year alone — for a local hotel in basic replacement and construction costs to maintain the facility.

“It’s unbelievable,” said Christensen.

“Lumber, for example, has gone up 3x through COVID. Which, if you could imagine what that would be on commercial real estate property, what kind of impact that would have — it would be dramatic,” added Christensen.

One way hotels might navigate the higher costs? He says guests might, in the future, have the option of a la carte pricing.

“With a shortage of labor, if you don’t want daily housekeeping, and you don’t want someone in your room — don’t pay for it. The owner saves the cost, you save the cost and we’re all better for it.




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