With construction costs up 7.42% over the past 12 months, RLB offers insight and analysis while the Bipartisan Infrastructure Law promises to accelerate construction projects across all markets, the AEC industry still faces strong headwinds.
With data current to mid-Q4 2021, the latest quarterly cost report shows that the national average increase in construction costs was approximately 1.82% (compared to 0.25% this time last year). Boston, Chicago, New York, San Francisco, and Seattle all experienced increases greater than 1.82% in the quarter. Denver, Honolulu, Las Vegas, Los Angeles, Phoenix, Portland, and Washington, D.C. experienced increases less than the national average.
The average increase in construction costs from 2020 through 2021 was 7.42%. It can be argued that some of the increase in 2021 may simply be catching up on the low rate of increase in 2020, but it is more likely a reaction to the combination of the labor shortages and supply chain issues that the industry has encountered. In my opinion, while 2022 should be less frenetic than 2020 and 2021, it is unlikely that we will see any relief from the current high rate of cost increases until some of the heat goes out of the economy.Julian Anderson, FRICS, President of RLB North America
A few key insights:
- RLB reports that from July 1, 2021 to October 1, 2021, the U.S. national average increase in construction costs was approximately 1.50% (7.42% annualized)
- Boston (2.66%), Chicago (2.28%), New York (1.92%), San Francisco (1.99%), and Seattle (5.00%) are the markets with cost increases above the national average during the fourth quarter
- Markets seeing an increase below the national average construction costs during the fourth quarter include Denver (1.34%, Honolulu (0.94%), Las Vegas (1.35%), Los Angeles (1.39%), Phoenix (1.21%), Portland (1.33%), and Washington DC (0.37%).