A significant spike in concrete prices is hitting commercial builders.

The thriving $78.5 billion infrastructure pipeline in Victoria is intensifying the demand for concrete, contributing to a 70 per cent increase in overall warehouse costs experienced by industrial builders and their clients since early 2020. 

While steel costs are showing signs of easing, big builders note that the multitude of infrastructure projects in the state is keeping concrete prices high.

The cost of installed concrete has soared nearly 50 per cent per square metre since 2020, impacting project viability.

Some have expressed concern about the industry reaching a point where increased rents in Melbourne and Sydney may no longer offset rising costs.

In a state committed to a $78.5 billion infrastructure investment, steel and concrete jointly constitute approximately 22 per cent of a standard warehouse project.

The housing industry is sounding the alarm about the potential impact of the country's $80 billion infrastructure spend, drawing skilled workers and materials away and jeopardising much-needed housing development.

Projects like Melbourne's West Gate Tunnel are now diverting concrete demand into commercial areas, expanding beyond traditional infrastructure needs, insiders warn.

Despite concrete costs on the rise, some major developers say investment decisions are not solely swayed by concrete expenses. 

Structural steel, reflecting global market conditions, surged from $5,000 a tonne in early 2020 to $8,000 by mid-2022, but has since settled around $7,000. 

In contrast, concrete, influenced more by local market dynamics, jumped from $84 per installed on-site square metre in early 2020 to $130 in mid-2023, now slightly reduced to $125.

Concrete costs are deterring some developments, and the anticipated increase in costs when high-rise housing development resumes is expected to further impact project demand and expenses.

In response to pandemic challenges, builders are adopting a new approach, developing closer relationships with subcontractors to ensure realistic work pipelines. 

This shift represents a departure from the past when builders secured projects without ensuring the availability of subcontracting resources.