Above photo taken by Dero. Designed by WDD Architects and Tsoi Kobus Design.
Costs for construction have gone up to levels much higher than would have been dreamed possible four years ago, said Brian Black, principal, AIA LEED AP, for Black, Corley, Owens & Hughes in Benton. Projects that were built for $185 per square foot in 2017 now cost $360 per square foot, he said.
Brian Black
“In particular, the costs of steel, glass, HVAC equipment and electrical equipment are exceptionally high,” Black said. “Much of the workforce has remained working at home even after the end of the COVID pandemic emergency. We no longer receive many calls to design office buildings as much of the workforce remained at home after COVID.”
While the architectural company has $76 million worth of projects under construction and a similar amount in various stages of design, there are still strong headwinds but with significant problems, including supply-chain issues, high interest rates and labor shortages.
“Construction would be an excellent career choice for any young person who is willing to show up on time and work hard,” Black said. “The possibilities are, in my opinion, limitless. Interest rates are affecting the size of the projects. Owners are learning to do more with less space. Buildings are becoming more compact and efficient. However, the demand continues to rise in the markets my company works in.”
Projects currently under construction for the Black firm include Lewis Chrysler Dodge Jeep Ram, Lewis Ford, Lewis Pre-Owned and Lewis Commercial Service Center, all in Fayetteville; Hale Trailer Brake & Wheel in North Little Rock; Riser Harness Ford in Searcy; and James River Ford and Lutesville Ford in Missouri.
McLarty Volkswagen in North Little Rock is one project of Black, Corley, Owens & Hughes in Benton.
Projects currently on the boards include Benton City Hall, Cowboy Chevrolet in Heber Springs, Everett Infiniti in Rogers, Fletcher Honda in Bentonville, McLarty Volkswagen in North Little Rock, Orr Hyundai in Russellville, Russell Honda in Sherwood and in Texas, Fort Worth Nissan and Granbury Nissan.
Nabholz, a multi-service commercial general contractor and construction management company based in Conway, has big projects going on around the region, including work at Arkansas Children’s in Little Rock and northwest Arkansas totaling $318 million; Hays High School in Hays, Kan., $104 million; Wynne Schools in Wynne, $125 million; Sapulpa Public Schools in Sapulpa, Okla., $110 million; the Northwest Arkansas National Airport terminal expansion, $34 million; and the University of Arkansas for Medical Sciences Health Orthopaedic & Sports Performance Center in Springdale, $70 million.
The University of Arkansas for Medical Sciences Orthopaedic & Spine Hospital is a project of Cromwell Architects Engineers in Little Rock.
Greg Fogle, Nabholz chief operating officer, said artificial intelligence is finding its way into the industry more often and in more ways.
Greg Fogle
“It is being used for tracking and managing data related to workflows, scheduling, workforce production and equipment, and materials management,” he said. “Virtual and augmented reality is being used for training and for hazard detection and avoidance. Virtual design and construction is widely used and improving every day to enhance planning and collaboration between trades and the design team.”
Wearable sensors for employees working on a site track their locations and monitor their biometrics. This is useful for determining a worker’s location within the worksite, separating workers from dangerous activities and detecting a worker’s health measurements (e.g., overheating, heart rate, etc.), so appropriate measures can be taken to protect the worker.
Fogle said the use of robotics is becoming more common, including for layout and materials management. He said robots are used more now for tasks such as building inspections, progress monitoring, topographical surveying and quantity measurements.
While supply-chain issues have improved, Fogle said there are still many suppliers facing production delays, raw material shortages and, of course, labor shortages that continue to create supply-chain issues.Â
“Labor availability is in short supply,” he said. “Construction is a business that is performed in work environments with extremes in temperature and often dusty, dirty conditions, which make it a less attractive choice for some people. Additionally, long hours can be required from time to time. Because of this, along with the fact that there are simply fewer people interested in the construction industry, labor can be scarce at times.
“Nabholz has benefited greatly from its training and development programs which allow us to employ younger employees — 16 and 17 years old — and train them as an apprentice. We also offer training programs for employees with little or no experience in construction, which has softened the labor shortage impact for our company.”
Higher interest rates change the feasibility of many construction projects. Fogle said some choose to postpone their building plans hoping for lower interest rates in the future, and others build smaller, less costly projects because more of their investment dollars must be committed to interest expenses.
Chad Young
Rising costs of construction materials are forcing architects to be more creative with building systems and design, said Chad Young, AIA, LEED AP, president and CEO of WDD Architects in Little Rock.
“I think that being able to offer a resilient, cost-effective design that is still creative, functional and beautiful is the focus of us architects,” Young said. “The ability for architecture to be able to adapt to technology and create designs used for multiple purposes coming out of a pandemic is a big trend. Flexibility is essential in commercial facilities. Many offices are providing landing spots for workers who work remote and in the office. It is ever evolving.”
Young also sees labor availability challenges and said there are large construction projects around the state that are tying up manpower and skilled laborers.
“Talking with our construction manager partners, there is still a pretty large demand and not a lot of available skilled workers on new projects, especially in northwest Arkansas,” Young said.
The highest interest rates seen in more than 20 years are impacting projects, he said.
Brian Black of Black, Corely, Owens & Hughes said high interest rates have led to more compact buildings.
“Projects whose owners need financing are not going forward as fast as some of the public projects,” Young said. “Financing, the higher cost of construction materials and a busy labor pool all impact the market and have caused some owners to delay their plans until things settle down.”
Current WDD projects include the University of Arkansas silicon carbide chip fabrication facility in Fayetteville, which will allow for the research, design and fabrication of microchips. Another significant project is the addition to UA’s Bogle Park, home of the Razorback softball program. The addition will include training facilities, as well as locker room and stadium upgrades. WDD also is renovating the existing Stone Bank headquarters in west Little Rock and designing the new Resorts at Rockwater, an upscale apartment project on the river in North Little Rock.
Meanwhile, Fayetteville’s C.R. Crawford Construction, which specializes in commercial construction, is reporting few workforce problems.
Jordan Ligon
“We see that labor in general is tight for this market, but we’re doing just fine with our workforce,” said Jordan Ligon, director of business development. “We have strong relationships with our partners and subcontractors and that has put us in a position where labor hasn’t become an issue on our projects here.”
Right now, the company is very busy, Ligon said. While it has become more challenging to get projects within owners’ budgets, the availability and cost of supplies is a little more predictable than in the middle of the COVID-19 pandemic, he said.
C.R. Crawford is starting a mixed-use project in Rogers in the fast-growing Pinnacle Hills area that will include multi-family housing, a hotel, retail stores and restaurants, including a new, two-story Ruth’s Chris Steak House. The project will be located near the site of a planned 5,000-seat soccer arena that will serve as home to a triple-A level professional franchise.
“This is a really good project that out-of-state developers are doing in our market,” Ligon said. “It will be a first-class development.”
As the population of northwest Arkansas continues to grow rapidly, concern about housing shortages grows with it. People moving in to take jobs are finding it tough to find housing, and some studies have suggested there is not going to be enough land for new housing if the trend continues towards single-family homes with large lots.
“More density is definitely a way to solve that problem without taking up too much land for development,” Ligon said. “It has been an emphasis from developers in the community to find a way to get more density and, at the same time, get more workforce housing, as well. There are a lot of advantages to mixed use. People can walk from their home to restaurants and shops. People moving from out of state from highly populated areas may be more used to that.”
High interest rates are causing developers and owners to push the pause button as they re-examine their original budgets. Ligon said when interest rates rise, the company is going back to the drawing board to bring on other investors or put more cash in the till to keep projects going.
“The sentiment we are getting is that everyone still wants to do the projects they have intended to do,” Ligon said. “It just delays the process of when a project will start. It has a ripple effect on labor and everything else as far as what they had planned for their upcoming pipeline. Our biggest change over the past year is we are doing a lot more design-build industrial projects where we have been able to be more efficient in the cost and the process by having all those services under one roof.”
Rob Seay said a diversified client base has been a boon for Cromwell Architects Engineers, which designed the CARTI Surgery Center and Sterling Market in Little Rock.
Cromwell Architects Engineers, headquartered in Little Rock and one of the biggest players in the state, has found value in being diversified in its client base, which includes medical, industrial, educational and government clients.Â
Rob Seay
“This allows us to take advantage of technology and innovative knowledge from each sector to benefit our wide range of clients,” said Rob Seay, PE, LEED AP, principal and executive vice president. “Regarding specific projects, an example of a recent industrial project would be Hostess Brands in Arkadelphia. Construction was recently completed where we converted an existing manufacturing plant into a donut factory. It was a very challenging but rewarding project.”
A major medical project is the Lyon College Institute of Health Sciences, which will include a dental and veterinary school in downtown Little Rock. The schools will provide much-needed education facilities for the people of Arkansas.
Major trends that Seay points to include a constant push for sustainability in design. Energy efficiency is continually improving due to requirements driven by the U.S. Department of Energy.
“Mechanical equipment is required to be manufactured with variable-speed everything — fans, compressors, pumps, etc.,” Seay said. “Renewable energy is an ongoing trend with a push towards net-zero buildings. Reducing the carbon footprint of buildings is the goal.”
Seay said he also sees a continued merging of engineering calculations using 3D modeling and virtual design. 3D scanning of buildings and job sites is the standard now, and scanners become more accurate every year, he said. Seay added the tech used may be a handheld device that measures the interior of buildings quickly or a drone that can scan an entire campus in a matter of hours.
The Mississippi County Courthouse is a project of Cromwell Architects Engineers in Little Rock.
“No more hand measuring,” Seay said. “It is now safer, faster and more accurate to measure buildings and sites with scanners. This information is easily imported into 3D models for design and planning purposes.”
While no clients have specifically identified financing cost as a factor in their project decision-making process, Seay said they must be a factor in project planning on the client side. The biggest challenge right now is material and equipment lead times, he said, a probable hangover from COVID in that factories cannot keep up with demand, which is true of many industries. This is a major contributor to the significant escalation of construction costs, he said.
“The lead times for mechanical equipment like rooftop units are getting better, but electrical equipment appears to be getting worse,” Seay said. “Large electrical switchgear is in the range of 48 weeks lead time from the time the factory receives the order. Emergency generators are two years out, as well as some electrical transformers. These drive costs up and require careful construction-schedule planning.” Â
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