How Smart Property Owners Are Managing Construction Cost Volatility

Every commercial property owner is asking the same question: Should we move forward with capital projects today, or wait and hope construction costs come down?

It’s a reasonable question. Roofing systems, paving projects and other capital improvements have all become more expensive over the past several years as petroleum-based materials, transportation costs and labor continue to fluctuate.

But according to Tom Murphy, Managing Director of Hiffman National, waiting rarely produces the outcome owners are hoping for.

“Construction markets don’t stand still,” Murphy says. “Our responsibility is to continually monitor pricing, contractor activity and procurement trends so we can help our clients make informed decisions, not decisions based on headlines or assumptions. Sometimes the right move is to wait. More often, it’s understanding how to buy smarter.”

That philosophy has become increasingly important as property owners navigate a market where material availability has largely stabilized, but pricing remains anything but predictable.

Today’s Challenge Isn’t Shortages. It’s Volatility.

Unlike the pandemic, today’s construction environment isn’t defined by empty warehouses or unavailable materials. Instead, owners are facing steady price increases driven largely by petroleum-based products.

Roofing membranes, polyisocyanurate (ISO) insulation, asphalt and seal coating have all experienced notable increases over the past year. Current market data illustrates the trend.

Overall roofing projects are now commonly seeing cost increases approaching 8% to 10%, while trucking surcharges continue climbing another 4% to 6% because of fuel costs.

For Hiffman National Director of Project Services Pete Kenny, these aren’t abstract market statistics, they’re realities his team manages every day. With dozens of roofing projects underway annually across the firm’s portfolio, Kenny has a front-row seat to the challenges owners are facing.

“The materials are available,” Kenny explains. “The difference today is that you need to plan for longer lead times and understand how those procurement timelines affect the overall schedule. It’s not the same environment we saw during COVID, but it does require much more proactive planning.”

One product illustrating that trend is polyisocyanurate (ISO) insulation. Although manufactured domestically, many of its raw components are sourced internationally, creating longer production and shipping timelines.

As Kenny puts it, “It’s slow in, slow out. The product will get here, it just takes longer than it used to.”

Why Many Owners Are Choosing Not to Wait

One question Kenny hears frequently from property owners is whether delaying projects might allow pricing to normalize.

His answer is usually straightforward.

“Most of our clients are moving forward,” he says. “Once construction pricing moves up, history shows it rarely comes all the way back down. We saw that after the pandemic. Waiting often means paying more later.”

That reality becomes even more significant when contractor pricing is considered. Most bids today are guaranteed for approximately 30 days. After that, contractors frequently reserve the right to adjust pricing based on current material costs.

Murphy says monitoring those pricing windows has become a critical part of Hiffman National’s advisory process.

“We spend a significant amount of time tracking pricing trends and helping clients understand when decisions need to be made,” Murphy says. “If we know a proposal expires in 30 days, we make sure our clients understand what’s at stake. Locking pricing today can protect them from meaningful increases tomorrow.”

Planning Earlier Creates Better Outcomes

Rather than reacting to construction cost volatility, experienced owners are changing how projects are planned. One of the most effective strategies has been moving procurement much earlier in the project lifecycle.

That doesn’t necessarily mean storing materials months before construction begins.

Instead, it often means purchasing products early while coordinating deliveries around the construction schedule. Kenny points to a recent 545,000-square-foot roofing project as an example.

“We purchased the insulation in bulk to lock in pricing, but instead of delivering everything at once, we scheduled deliveries in thirds,” Kenny says. “The first shipment allowed construction to begin immediately, and the remaining material arrived as the project progressed. That kept the project moving without requiring excessive onsite storage.”

The strategy also helped mitigate longer manufacturing lead times without delaying construction.

Experience Matters More Than Ever

Construction cost management extends far beyond obtaining competitive bids. Today’s owners need partners who understand procurement timing, contractor pricing, supplier relationships and project logistics.

Murphy believes that’s where experienced project management delivers its greatest value.

“Anyone can compare numbers on a proposal,” Murphy says. “The real value comes from understanding the market behind those numbers, knowing when to buy, when to wait, how to structure procurement and how to keep projects moving when conditions change.”

For owners managing capital improvements across multiple assets, those decisions can significantly influence both project budgets and long-term asset performance.

Looking Ahead

Construction costs will continue to fluctuate, but successful owners aren’t waiting for certainty before making decisions. Instead, they’re relying on better planning, earlier procurement and experienced project management to reduce risk and protect long-term value.

As Kenny sees it, preparation has become one of the industry’s most valuable tools.

“You can’t control the market,” he says. “What you can control is how early you plan, how you procure materials and how well you manage the project. That’s where owners can make the biggest difference.”

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About NAI Hiffman:

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 275 employees strategically located throughout North America.

About Hiffman National:

Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 275 employees nationally and an additional six hub locations and 25 satellite offices across North America.