In the 12 months ended December 2021, bid construction costs rose 7.42 percent. “These increases are reminiscent of the sort of cost increases that we saw in the period 2004 to 2007,” wrote Julian Anderson, FRICS, President-North America for the construction advisory firm Rider Levett Bucknall (RLB), which today released its Fourth Quarter 2021 North America Construction Cost Report.
RLB’s National Construction Cost Index for the fourth quarter stood at 225.38, 7.4 percent higher than the Index for the fourth quarter of 2020, and 1.8 percent higher than last year’s third quarter. In his essay for this report, Anderson was optimistic about the eventual positive impact of the recently passed Bipartisan Infrastructure bill on construction and repair.
However, the force of that legislation could be stymied, or at least delayed, by supply chain problems that continue to plague the industry. Bottlenecks at western ports and chronic shortages of skilled labor still contribute to this volatility. Cost increases are also a function of rising inflation, as the Consumer Price Index registered a year-over-year increase of 5.38 percent.
On the positive side, America’s Gross Domestic Product, which measures output, returned to 2.1 percent, which was about where it was in the pre-pandemic fourth quarter of 2019. And the rate of unemployment for the construction sector dipped to 4.5 percent in Q421, versus 9.6 percent in Q420. Construction tracked national unemployment that has also been on a downward trend.
SEVERAL METROS BUCKED QUARTERLY COST TREND
Nonresidential construction spending in November 2021, the latest month for which data were available from the Census Bureau, stood at $820.6 billion, 3.4 percent higher than the same month in 2021. But materials and labor keep getting more expensive, too. RLB’s Comparative Cost Index found that, from October 2020 through October 2021, construction costs rose by 10.09 percent in Seattle, by 9.11 percent in Washington DC, by 9.01 percent in Chicago, by 8.85 percent in Boston, and by 8.51 percent in New York.
Indexed by building type, construction costs were among the highest in New York for offices, shopping malls, hospitals, single-family homes, and high schools. San Francisco’s construction costs exceeded the other markets RLB tracked for five-star hotels, hospitals, warehouses, parking structures, multifamily homes, high schools, and universities.
Honolulu is the most expensive market in which to build elementary schools. But that market, along with Denver, Las Vegas, Los Angeles, Phoenix, Portland, and Washington DC, experienced overall cost increases between July 1 and October 1 that were less than the national average for that period, according to RLB estimates.
Related Stories
Market Data | Jul 27, 2020
The U.S. construction pipeline remains robust through the first half of 2020, despite pandemic
Projects currently under construction stand at 1,771 projects/235,467 rooms, up 3% and 1% respectively, YOY.
Market Data | Jul 24, 2020
5 must reads for the AEC industry today: July 24, 2020
North Carolina will stop relying on FEMA flood mapping and Cal Poly Pomona's newest project.
Market Data | Jul 23, 2020
New LEED guidance from USGBC helps cities and communities expand resilience efforts in response to the COVID-19 pandemic
Credits integrate public health and social equity with sustainability planning.
Market Data | Jul 23, 2020
6 must reads for the AEC industry today: July 23, 2020
Skanska selects Pickard Chilton to design new ofice tower and days grow long at nursing homes as virus lockdowns drag on.
Market Data | Jul 22, 2020
6 must reads for the AEC industry today: July 22, 2020
Phase one of Toronto's The Orbit detailed and architecture billings remains in negative territory.
Market Data | Jul 21, 2020
Nonresidential building spending to decline through 2021
The commercial building sector is expected to be the hardest hit.
Market Data | Jul 21, 2020
7 must reads for the AEC industry today: July 21, 2020
Abandoned high-rise becomes mixed-use luxury apartments and researchers are developing anti-coronavirus tech for buildings.
Market Data | Jul 20, 2020
Construction employment rises from May to June in 31 states, slips in 18
Recent data from Procore on jobsite workers’ hours indicates employment may have leveled off.
Market Data | Jul 20, 2020
6 must reads for the AEC industry today: July 20, 2020
Never waste a crisis and robotic parking systems help developers optimize parking amenities.
Market Data | Jul 17, 2020
7 must reads for the AEC industry today: July 17, 2020
Kennedy Middle School's new Administration/Family Center and Tips to make optimal use of salvaged materials.