Economy Watch: Construction Costs Still Rising in Major Metros
- Feb 15, 2018
According to the Rider Levett Bucknall Quarterly Construction Cost Report for the fourth quarter of 2017, which was released recently, construction costs are rising across the country. It’s another confirmation of ancedotal evidence throughout the U.S. construction industry.
In fact, the year-over-year rate of growth in 12 major metros tracked by the report was negative only in Honolulu, where costs declined 0.51 percent for the year. That’s a market which, in any case, is almost an expensive as New York or San Francisco, currently the priciest for construction.
The highest annual increase was, unsurprisingly, San Francisco, with construction costs up 7.63 percent. Los Angeles came in a close second, posting a 7.08 percent year-over-year hike. Also above 5 percent: Portland, Ore. (5.76 percent), Chicago (5.33 percent), and Seattle (5.21 percent). The other metros mostly fell between 3 percent and 4 percent increases.
Between last July 1 and Oct. 1, average construction costs increased about 1 percent nationally. Several markets recorded increases higher than one percent, including Chicago, Denver, Las Vegas, Los Angeles, Phoenix, and Portland. On the other hand, Boston, Honolulu, New York, San Francisco, Seattle, and Washington, D.C., all saw increases of less than 1 percent.
The report tracks the true bid cost of construction, which includes, in addition to labor and materials, general contractor and subcontractor overhead costs and fees (profit), according to Rider Levett Bucknall. It also includes applicable sales/use taxes typical of ‘standard’ construction contracts.