In the first six months of 2022, quarter-to-quarter inflation for construction materials showed signs of easing, but only slightly. “It’s important to clarify that costs are not decreasing; a more accurate description is that [they are] getting expensive less quickly,” stated Dallas-based architecture and construction firm The Beck Group, in its Summer 2022 Biannual Cost Report, which Beck released this week.
Covering January through June of this year, the report combines market data from a variety of sources—including AIA, FMI, McKinsey & Company, Autodesk, Cumming, the Urban Land Institute, and Associated General Contractors of America—with insights from the firm’s preconstruction teams in six markets: Atlanta, Austin, Charlotte, Dallas-Fort Worth, Denver, and the state of Florida.
Market conditions remain challenging nearly everywhere. “Schedule-related constraints are a new norm in today’s market,” The Beck Group contends. “Construction firms are in the middle of suppliers who can’t or won’t commit to pricing longer than 10 days and owners with historically prolonged approval processes. This reality conflicts with the past when it was still possible to hold pricing for upwards of 60 days.”
![Input Prices and Construction spending](/sites/default/files/inline-images/Input%20prices%20and%20construction%20spending.png)
![Inflation continues to rise](/sites/default/files/inline-images/Beck%20inflation.png)
That being said, The Beck Group claims that the industry is on the cusp of a “new era in collaboration to manage costs and schedules.” That is especially true for developers and owners that bring their AEC partners into projects as early as possible. In its report, The Beck Group offers a list of strategies for managing inflation and supply-chain disruptions that mostly revolve around earlier procurement (see box).
![Beck Group has devised strategies for fighting inflation and supply chain disruptions.](/sites/default/files/inline-images/BECK%20strategies.png)
Beck itself creates procurement packages for its clients to secure materials and equipment, a service that involves the firm’s design and construction teams.
DENVER AN EXPENSIVE PLACE TO BUILD IN
![The Beck Group explored costs in six markets.](/sites/default/files/inline-images/Beck%20Building%20Type.png)
On the whole, The Beck Group is seeing significant demand and construction activities in the Sun Belt, in line with the “constant migration” of people and businesses to that region. (It points out, for example, that 43 high-rise towers are under development or construction in Austin.) To keep up with that demand, subcontractors in Texas must rely on imported cement (which, ironically, is among the construction materials least affected by current inflation).
The report takes a deeper dive into the six Sun Belt markets mentioned above, and breaks down project costs by building types—office, healthcare, higher education, faith-based, hospitality, parking, and site work—and their respective sub niches.
The Denver metro is experiencing high demand for multifamily and mixed-use projects. Existing and planned projects are plentiful in the Atlanta market, and subcontractors report substantial backlogs. Building activity in the Florida market remains healthy, bolstered by the state’s economy that is expected to expand by 4 percent between now and 2024. The most significant demand for construction is education, healthcare, and aviation.
Across all building types, it costs more to build or renovate in Denver than in the other five markets, albeit only marginally so in several cases. For example, in healthcare, Denver’s costs per sf for ambulatory surgery centers—ranging from $477 to $583—were around $10 to $25 higher than the other metros. Science and lab buildings cost from $650 to $901 per sf to construct in Denver, versus $631 to $885 in Austin, another S+T hotbed.
The report also compares the cost per key to build or renovate hotels in these six markets, as well as the cost per space for parking and the cost per acre for site development.
CONSTRUCTION EMPLOYMENT STRENGTHENING
![Construction unemployment is easing a bit](/sites/default/files/inline-images/Beck%20employment.png)
The Beck Group report corroborates what other recent studies have been finding: that the construction employment market, nationally, is improving. Beck predicts this trend to continue as higher wages lure more people into the profession. The employment situation might also explain the slight bump in industry confidence that was evident in the first half of the year.
Related Stories
Market Data | Apr 20, 2020
6 must reads for the AEC industry today: April 20, 2020
The continent's tallest living wall and NMHC survey shows significant delays in apartment construction.
Market Data | Apr 17, 2020
Construction employment declines in 20 states and D.C. in March, in line with industry survey showing growing job losses for the sector
New monthly job loss data foreshadows more layoffs amid project cancellations and state cutbacks in road projects as association calls for more small business relief and immediate aid for highway funding.
Market Data | Apr 17, 2020
5 must reads for the AEC industry today: April 17, 2020
Meet the 'AEC outsiders' pushing the industry forward and the world's largest Living Building.
Market Data | Apr 16, 2020
5 must reads for the AEC industry today: April 16, 2020
The SMPS Foundation and Building Design+Construction are studying the impact of the coronavirus pandemic on the ability to attain and retain clients and conduct projects and Saks Fifth Avenue plans a sanitized post-coronavirus opening.
Market Data | Apr 15, 2020
5 must reads for the AEC industry today: April 15, 2020
Buildings as "open source platforms" and 3D printing finds its grove producing face shields.
Market Data | Apr 14, 2020
6 must reads for the AEC industry today: April 14, 2020
A robot dog conducts site inspections and going to the library with little kids just got easier.
Market Data | Apr 13, 2020
6 must reads for the AEC industry today: April 13, 2020
How prefab can enable the AEC industry to quickly create new hospital beds and Abu Dhabi launches a design competition focused on reducing urban heat island effect.
Market Data | Apr 10, 2020
5 must reads for the AEC industry today: April 10, 2020
Designing for the next generation of student life and a mass timber Ramada Hotel rises in British Columbia.
Market Data | Apr 9, 2020
7 must reads for the AEC industry today: April 9, 2020
Urine could be the key to building in outer space and how to turn a high school into a patient care center in just over two weeks.
Market Data | Apr 8, 2020
6 must reads for the AEC industry today: April 8, 2020
Stantec discusses how hospitals can adapt buildings to address worst-case scenarios and FXCollaborative Architects tells us why cities will survive the pandemic.