Concerns over long-term impacts from COVID-19 halted a number of planned and in-development construction projects across the country initially. While construction has rebounded in many areas, it still remains flat for certain sectors including hospitality and retail. However, as demand surges in other real estate industries including infrastructure, warehouses, industrial real estate, and residential housing, the labor gap seems to be growing, putting tremendous pressure on labor costs and materials as they are in short supply.
The construction industry is now facing a shortage of skilled labor which, if unrectified, could present long-term challenges for investors. Thankfully, people are noticing, including those at Workrise, which is making big strides to combat the workforce shortage and help bring trained construction workers back to the field.
Bridging the labor gap
The construction industry is constantly changing. Demand and job availability fluctuate with the market, but long-term trends are leaning toward renewable energy. The Bureau of Labor Statistics believes the construction industry will continue to see 5% higher than average demand for construction labor until 2029. Workrise, a workforce management solution that helps pair companies with skilled construction workers in their respective industries, has raised $300 million to help bridge the labor gap and bring more skilled workers to the market.
The capital raise was completed in a Series E round, which was led by the investment management company Baillie Gifford and New York-based investment fund Franklin Templeton in addition to existing investors in Workrise, Founders Fund, Bedrock Capital, Andreessen Horowitz, Moore Strategic Ventures, 137 Ventures, and Brookfield Growth Partners.
Workrise, formerly known as RigUp, got their start in the oil and gas industry but has since expanded into renewable energy such as sun, wind, or solar power, commercial real estate construction, and defense construction. In 2020, Workrise placed a third of its workers, over 4,500 workers, in renewable energy jobs, a trend the company believes will continue as a focus while infrastructure and clean energy are supported by the Biden administration. The company states their goal is to help train 100,000 workers by the end of 2023 and 1 million by 2030.
How this could impact the market
Providing the necessary training to increase the number of eligible and experienced workers in the construction industry would undoubtedly help reduce the workforce gap over the next several years. It should also help improve the economy at large, including benefiting everyday investors. Low supply and high demand equates to higher construction and labor costs, something many development and management companies are battling against in our current market.
New green developments and alternative construction solutions are hitting the market including modular homes and even concrete alternatives to help combat the high demand and lack of workforce and materials. However, alternative building materials will still require a skilled workforce to complete construction on or off site. Hopefully, the efforts of Workrise along with various government-funded programs can help with training and hiring construction workers over the next few years. The company, now valued at an estimated $2.9 billion, currently serves 70 metro areas in the U.S., giving its endeavors a wide reach.