Report: Commercial Construction Costs Increase

Commercial real estate construction costs increased nearly 1.4 percent over the previous quarter, reported Rider Levett Bucknall, Phoenix.

With data current to the middle of the first quarter, the RLB Quarterly Cost Report said construction cost is up 8.1 percent year-over-year.

Boston, New York, Phoenix, Portland, Seattle and San Francisco all saw increases over the national average, RLB said. Chicago, Denver, Honolulu, Las Vegas, Los Angeles and Washington, D.C. saw gains below the national average.

“There’s an air of economic uncertainty lingering over 2023, especially around oil prices and unresolved bank stress,” said Julian Anderson, President of RLB North America. “As compared to last year at this time, things look difficult, but for different reasons. On the bright side, inflation seems to be leaning in the right direction and other challenges like workforce development are following suit.”

The report noted the construction unemployment rate fell slightly to 4.4 percent from 5.0 percent one year ago and said the number of construction cranes in the 14 cities surveyed increased to more than 500, setting a record. Of the fourteen cities surveyed, eight have more construction cranes, two have fewer and four held steady.

“Despite continued workforce challenges and economic uncertainties are still concerns for the coming year, we are continuing to see new projects break ground within our 14 key markets,” the report said. “This indicates that investments are continuing to be made into our cities. We anticipate the number of cranes to remain high into 2023. Despite uncertain market conditions, construction projects will continue to break ground, albeit at a cost.”