Construction costs nationally rose in 2018 by an average of 5.73%, with Chicago and Portland, Ore., showing the greatest increases among major cities.
Costs rose at a time when many markets are at or near their construction-activity cycle, and as industry unemployment remained higher than the country’s at large.
Those are two findings in the latest Quarterly Construction Cost Report for North America, released by the property and construction consultant Rider Levett Bucknall (RLB), and based on an analysis of 15 building typologies in 14 metros. (The sectors analyzed include single- and multifamily housing, as well as parking structures.)
The full quarterly report can be accessed here.
The U.S. Department of Commerce estimates that, as of January 2019, the seasonally adjusted annual rate for Construction Put-in-Place was just under $1.28 trillion, 0.3% above the same monthly estimate a year earlier.
However, the National Construction Cost Index has been on a fairly steady upward trajectory since the first quarter of 2014. As of the first quarter of 2019, that Index stood at 198.33 (relative to the April 2001 base of 100, recalibrated as of April 2011).
Some examples of RLB’s findings include its estimate that the cost of building prime office space is highest in Boston and New York, lowest in Phoenix and Denver. Los Angeles has the highest construction costs for hospitals, and Las Vegas the lowest for elementary schools.
Eight of the 14 markets analyzed were at their construction-activity peaks by the end of last year. Chicago’s construction costs, in general, increased the most (7.61%, to $22.8 billion) among the metros analyzed, even though it was the only city that fell into the “mid decline” category for construction activity. Honolulu, the only city in “trough growth,” saw construction costs rise by 4.86% to $24.8 billion.
Eight of the 14 metros tracked are at the top of their constuction cycles. Image: RLB
San Francisco had the highest construction put-in-place, $26.844 billion, up 6.73%.
Increasingly expensive construction activity occurred despite a decrease in architectural billings, and an industry unemployment rate that, at 5.1% in the fourth quarter of last year, was down from 7.4% in the first quarter of 2018.
The U.S. Gross Domestic Product closed out the fourth quarter at 2.6%, down from a mid-year peak of 4.2%. Inflation last year was up only 1.91%.
The report also analyzes construction costs in Canada, specifically Calgary, Alberta, and Toronto, Ontario. RLB notes that those two cities are driving much of the growth in Canada’s economy.
Related Stories
Market Data | Jan 28, 2020
Los Angeles has the largest hotel construction pipeline in the United States
Los Angeles will have a growth rate of 2.5% with 19 new hotels/2,589 rooms opening.
Market Data | Jan 27, 2020
U.S. hotel construction pipeline finishes 2019 trending upward
Projects under construction continue to rise reaching an all-time high of 1,768 projects.
Market Data | Jan 24, 2020
U.S. Green Building Council releases the top 10 states for LEED
Colorado leads the nation, showing how LEED green buildings support climate action and a better quality of life.
Market Data | Jan 23, 2020
Construction contractor confidence surges into 2020, says ABC
Confidence among U.S. construction industry leaders increased in November 2019 with respect to sales, profit margins, and staffing, according to the Associated Builders and Contractors Construction Confidence Index.
Market Data | Jan 22, 2020
Architecture Billings Index ends year on positive note
AIA’s Architecture Billings Index (ABI) score of 52.5 for December reflects an increase in design services provided by U.S. architecture firms.
AEC Tech | Jan 16, 2020
EC firms with a clear ‘digital roadmap’ should excel in 2020
Deloitte, in new report, lays out a risk mitigation strategy that relies on tech.
Market Data | Jan 13, 2020
Construction employment increases by 20,000 in December and 151,000 in 2019
Survey finds optimism about 2020 along with even tighter labor supply as construction unemployment sets record December low.
Market Data | Jan 10, 2020
North America’s office market should enjoy continued expansion in 2020
Brokers and analysts at two major CRE firms observe that tenants are taking longer to make lease decisions.
Market Data | Dec 17, 2019
Architecture Billings Index continues to show modest growth
AIA’s Architecture Billings Index (ABI) score of 51.9 for November reflects an increase in design services provided by U.S. architecture firms.
Market Data | Dec 12, 2019
2019 sets new record for supertall building completion
Overall, the number of completed buildings of at least 200 meters in 2019 declined by 13.7%.