Rebuilding after Hurricane Ian with construction supply, labor shortages

South Florida Business Journal // September 30, 2022

By Brian Bandell

The massive damage Hurricane Ian inflicted on Southwest Florida will require an influx of building materials and construction labor, which is sure to exacerbate shortages for businesses across the state.

Even before the storm, a double-digit surge in construction costs due to supply chain shortages and rising labor expenses created challenges for many developers in South Florida.

Now, new projects in the tri-county area will likely compete for building materials and labor as reconstruction projects are underway in the areas most affected by the storm, said Peter Dyga, CEO of the Florida East Coast chapter of Associated Builders and Contractors.

“Almost without exception we are experiencing unreliable timeframes in obtaining building materials, if you can get them at all, and labor is facing similar problems, Dyga said. “For places that need to be rebuilt a from structure perspective, this is not a good outlook.”

CoreLogic estimated Hurricane Ian caused $28 billion to $47 billion in uninsured and insured windstorm and storm surge losses to residential and commercial properties in Florida. Fitch Ratings estimated the insured losses from the storm in Florida at $25 billion to $40 billion.

That’s not even counting the damage to infrastructure, such as roads and bridges that were washed out, Dyga said, adding that government will make rebuilding infrastructure a top priority, so labor and materials will be allocated to those projects first.

“Some capacity for new construction could be moved to reconstruction,” Dyga said. “We can’t continue with the same level of new construction in some parts of the state as we try to rebuild.”

Following a hurricane, Florida law allows general contractors to suspend the termination of existing building permits, so they can pause existing jobs and focus on reconstruction, Dyga noted.

Adam Mopsick, CEO of Miami-based construction management firm Amicon, said a shortage of labor will be the biggest problem in balancing rebuilding from Hurricane Ian with new construction. Southwest Florida doesn’t have a very deep pool of subcontractors, so it will have to pull workers from South Florida and Tampa Bay, but those neighboring regions already have plenty of construction work, he said. Some construction workers could travel from out of state, but it can be a challenge to ensure they are certified to perform quality work, Mopsick said.

Aside from critical infrastructure projects, most of the rebuilding won’t take place right away. Property owners will need to assess the damage, work with their insurance providers, and decide whether to rebuild. That could take time. The question is whether they will be able to find labor, and it will be even more difficult for the smaller projects, Mopsick said.

That could cause delays in construction and impact pricing.

“From the fourth quarter of 2021 to the second quarter of 2022, I have seen the biggest construction cost increases of my career, in the range of 25% to 30%,” Mopsick said. “We were looking forward to the industry catching its breath and leveling off but the storm changed all that.”