Concerns about the long-term effects of COVID-19 initially halted a number of planned and under-development construction projects across the country. While construction has rallied in many areas, it remains unchanged for certain sectors, including hospitality and retail. However, as demand increases in other real estate industries such as infrastructure, warehouses, industrial real estate and residential property, the work gap appears to be widening, putting enormous pressure on labor costs and materials as they are scarce.
The construction industry is now facing a skills shortage which, if not corrected, could pose long-term challenges for investors. Thankfully, people, including those at Workrise, are seeing great strides being made to address labor shortages and get trained construction workers back into the field.
Bridging the work gap
The construction industry is constantly changing. Job demand and availability fluctuate with the market, but the long-term trends are towards renewable energies. The Bureau of Labor Statistics predicts that demand in the construction industry will continue to be 5% above average through 2029. Workrise, a workforce management solution that connects businesses with skilled construction workers in their respective industries, has raised $ 300 million to help bridge the work gap and bring more skilled workers to market.
The capital increase was completed in a Series E round led by investment management firm Baillie Gifford and New York-based mutual fund Franklin Templeton, as well as existing investors in Workrise, Founders Fund, Bedrock Capital, Andreessen Horowitz and Moore Strategic Ventures was headed, 137 Ventures and Brookfield Growth Partners.
Workrise, formerly known as RigUp, started out in the oil and gas industry but has since expanded to include renewable energies such as solar, wind or solar, commercial real estate and defense construction. In 2020, Workrise placed a third of its employees, more than 4,500 employees, in jobs in the renewable energy sector. The company believes that this trend will continue to be at the fore, while infrastructure and clean energy will be supported by the Biden administration. The company says its goal is to have 100,000 employees by the end of 2023 and 1 million by 2030.
How this could affect the market
Providing the necessary training to increase the number of qualified and skilled workers in the construction industry would undoubtedly help to narrow the workforce gap over the next few years. It should also help improve the economy as a whole, including benefits for everyday investors. Low supply and high demand mean higher construction and labor costs that many development and management companies are battling in our current market.
New eco-friendly developments and alternative construction solutions are emerging, including modular homes and even concrete alternatives to counter the high demand and shortage of manpower and materials. However, alternative construction materials still require skilled labor to complete construction on-site or off-site. Hopefully, Workrise’s efforts along with various government funded programs can help train and hire construction workers over the next few years. The company, valued at $ 2.9 billion, currently serves 70 subway areas in the United States, providing broad reach.