Circumventing current supply chain constraints in construction: There is a way, but how?

In a June blog post published by the White House, economists Susan Helper and Evan Soltas explained how the global pandemic has disrupted domestic supply chains for both manufacturing and construction.  But while the authors addressed the underlying causes and their effects (namely, price inflation across the board) and based their analysis on historical data, they did not touch on potential solutions.  They overlook that today we are in the midst of a supply chain and logistics renaissance.  Technology with SAP ERP systems have never been so robust, and there has never been a consumer goods leader like Amazon.  In 2021, e-commerce is leading the way for consumer goods purchases in the future, but this still proves challenging for multifamily.

For the construction industry, labor and materials pricing is highly sensitive to supply and demand. There are those that believe that before the pandemic, as much as 30% of all materials and products utilized on many projects were purchased abroad. The pandemic upset a supply chain built on more than two decades of cheap labor and material costs secured through globalization, leading to dramatic price increases over the past 18 months.  As a result, many manufacturers are building new factories in the United States. With this new production capacity, the US domestic supply chain may be more reliable, but product costs will certainly rise at least 20% over existing prices.  How can owners, operators, developers or contractors working with the multifamily markets ever profit under these circumstances?  Prices for assets are at the highest levels per-capita in decades and trading value-add assets now requires more cost effective renovations for profitability. 

What is the answer for 2021 and the years to come?  TASORO Products from Los Angeles, CA have it figured out: eliminate the need for big-box stores and other large public company suppliers currently clogging the supply chain.

Throughout the pandemic, TASORO has been able to keep its supply chain intact by working with a myriad of different factories and being nimble with its different freight forwarders, allowing the company to pivot when needed, receive product on time and effectively save costs with higher quality product --TASORO states that with its model it can save typical multifamily operators 20-40% on interior product finishes.

Alternatively, public big box companies would rather sell out of the millions of square feet of inventory they have in stock to avoid impacting their stock price.  While no one is immune to skyrocketing freight costs and congestion, TASORO does not answer to Wall Street, and if it needs to absorb costs and hit its own margin in favor of its long-standing client list, it will. 

TASORO was founded by a group of seasoned real estate professionals to provide product solutions direct to multifamily owners, increasing IRR and ROI success by its ability to raise standards and lower costs with its quality interior finish building materials.  Frustrated by materials’ scarcity, diminishing quality, and increasing prices, the founders of TASORO endeavored to disrupt the building materials industry by cutting out all the “middlemen” and delivering unmatched value directly to multifamily owners, investors, operators, developers, property management, contractors, and subcontractors.  The products are made by multifamily specifically for multifamily. 

Notable projects that TASORO has delivered include working with a large co-GP and property management company where they were able to deliver complete interior finishes to Provo, UT on time for 100+ units without incident.  The project did, however, have issues with non TASORO items (piping, electrical wires, etc.) that the client could not easily procure from the big boxes.  Additionally, TASORO is additionally currently supplying a large general contractor in St. Louis with white shaker cabinets that the GC could not get from their standard outlets, which do not have direct supply chain access like TASORO. TASORO is additionally supplying a nationwide REIT with its interior material finishes saving them 30%+ compared to their prior supplier with higher quality product.

TASORO steps up the game even more by palletizing orders and landing them seamlessly on a project.  This saves time, money, energy and headache for all those ever involved with either value add or new construction.  TASORO’s unique business model is changing the way materials are purchased for multifamily projects by solving supply chain constraints and lowering construction costs without sacrificing product quality. 

The wave of the future of multifamily value-add and development is the prepurchase of quality materials at bulk pricing from companies that understand supply chain and logistics.  Others that continue to work in the archaic fashion, whether they are owners, operators, developers or contractors, are just leaving a significant amount of money on the table and that’s not good business.