JLL: Construction Costs Up This Year

(Copper wire, courtesy of Patrycja Grobelny/pexels.com)

JLL, Chicago, released its 2026 Construction Perspective: Mid-Year Update, which finds construction cost escalation is accelerating.

Final-cost indices, including margins, are running 5% year-over-year. JLL’s November report set an upper bound of about 8% materials price growth for full-year 2026, and the mid-year update notes that costs show a “meaningful probability” of reaching that ceiling.

Tarriff pass-through and energy costs driven by geopolitical factors are both playing a role, JLL noted.

Divergences are visible in commodity data, JLL reported. Copper is up 36% year-over-year, aluminum is up 45% and U.S. HRC steel is up 27%. But, brent crude is down 38% from its April peak.

Labor constraints are also a factor, with significant structural and geographical factors. JLL’s November report projected construction employment growth running notably below its historical average of 2.7%; annual growth is just 0.6% so far in 2026. Sixty-one percent of U.S. metro markets are currently labor supply constrained. That share will rise to 72% by 2027, the report predicts.

Moreover, the construction market is split: data center construction is booming, consuming materials and labor–and causing constraints for other projects. For example, contractor backlogs are nearly 50% longer for those with data center exposure than those without.

“The in-demand markets are those where labor’s been tight and isn’t expected to keep pace with growing pipelines,” said Louis Molinini, head of project and development services, Americas, JLL. “If your project is competing for the same crews and subcontractors as data center work, you’re going to feel it in cost and schedule now and for the foreseeable timeline. The organizations that figure that out now, instead of when their bids come back high, are the ones that stay in control of project delivery. “