
The U.S. construction industry is at a critical juncture, with workforce shortages threatening to derail growth across multiple sectors. According to the Associated Builders and Contractors (ABC), the industry will require 439,000 new workers in 2025 to meet demand. Yet, this figure may understate the problem, as recent trends suggest the shortage could be even more severe. For healthcare real estate professionals, understanding these challenges is essential as they navigate development projects in an increasingly complex construction landscape.
Key Drivers of the Workforce Gap
Several factors are fueling this labor shortage, including:
Housing Shortages and Multifamily Projects: The U.S. faces a persistent housing crisis, with multifamily housing developments in urban and suburban markets accelerating to meet demand. These projects require skilled tradespeople, creating fierce competition for talent.
Recovery from Natural Disasters: Recent hurricanes in the Southeast and wildfires in California have intensified rebuilding efforts, further straining the workforce. Healthcare facilities in disaster-prone regions are particularly affected as they prioritize resiliency upgrades.
The Growth of Data Centers: As artificial intelligence and other technology sectors expand, the federal push to build data centers has introduced a new layer of demand for construction workers. For healthcare real estate, this trend could exacerbate competition for contractors as data centers and healthcare facilities often require overlapping skill sets for specialized construction.
Federal Policies on Immigration and Labor Availability: Immigration policies continue to impact the availability of workers, particularly for entry-level and skilled trade roles. Without a consistent pipeline of workers, the industry struggles to keep pace with demand.
The Cost of Labor Shortages
The labor shortage has far-reaching implications for the construction industry, especially as it pertains to rising costs. Over the last 12 months, average hourly earnings in the construction sector have increased by 4.4%. Higher labor costs, combined with inflation and elevated material prices, could make some projects unaffordable. For the healthcare real estate sector, this presents a significant challenge. Hospitals, medical office buildings, and outpatient facilities are already expensive to build due to stringent regulatory requirements and advanced mechanical systems.
Looking ahead, the ABC projects that if construction spending continues to rise through 2026, the industry could require as many as 499,000 new workers. Without sufficient labor, the costs associated with healthcare facility development could become prohibitive, delaying much-needed projects or reducing their scope.
How Healthcare Real Estate Can Navigate the Crisis
Healthcare real estate professionals must adapt to these workforce challenges by employing strategies that address rising costs and limited labor availability:
Partnering with Experienced Contractors: Collaborating with contractors who have a proven track record in healthcare construction can help ensure projects stay on time and within budget despite labor shortages.
Investing in Modular Construction: Prefabricated and modular building techniques can reduce reliance on onsite labor while accelerating timelines. For healthcare facilities, modular construction is particularly valuable in creating standardized components, such as patient rooms or operating suites.
Exploring Incentives for Skilled Trades: Incentives such as apprenticeships or training programs could help attract new workers to healthcare construction projects. Partnering with local trade schools or unions may also provide access to a dedicated talent pool.
Strategic Project Timing: For projects that are not time-sensitive, delaying construction until labor availability improves may help mitigate cost overruns. Careful coordination with contractors can help align timelines with workforce capacity.
Conclusion: Rising to the Challenge
The U.S. construction labor shortage is a pressing issue, with widespread implications for industries reliant on large-scale development, including healthcare real estate. As demand for multifamily housing, disaster recovery, and data centers continues to grow, competition for skilled workers will only intensify. By understanding these challenges and implementing proactive strategies, healthcare real estate professionals can navigate this evolving landscape and ensure that critical projects remain viable.
For more insights on how workforce trends impact healthcare real estate development, connect with Cadre Healthcare Real Estate Advisors today. Together, we can build solutions to meet the growing demands of the industry.
Krone Weidler, Founder & Principal
Cadre Healthcare Realty Advisors
1095 SE 177th Place, Suite 404-M14
Summerfield, FL 34491
C: (813) 842-2365
O: (866) 355-3594
Comments