{"id":1004732394,"date":"2024-10-09T04:02:11","date_gmt":"2024-10-09T12:02:11","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004732394"},"modified":"2024-10-15T06:19:41","modified_gmt":"2024-10-15T14:19:41","slug":"construction-cost-increases-hit-3-year-low","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/construction-cost-increases-hit-3-year-low\/","title":{"rendered":"Construction Cost Increases Hit 3-Year Low"},"content":{"rendered":"\n

The national average increase in construction costs was 1.07 percent in the third quarter, the lowest in the past three years, according to Rider Levett Bucknall\u2019s crane index and quarterly cost report, which studies 14 key markets.<\/p>\n\n\n\n

Boston, Denver, Honolulu, New York City, Seattle and Washington, D.C., all saw gains exceeding the national average this quarter. Chicago, Las Vegas, Los Angeles, Phoenix, Portland and San Francisco recorded gains that were below the national rate.<\/p>\n\n\n\n

The construction costs index increased 4.91 percent year-over-year, and the construction unemployment rate slipped slightly to 3.2 percent, down 0.7 percent from the same period last year.<\/p>\n\n\n\n

\"Comparative<\/a>
Comparative map of the annual percentage change in construction costs between July 2023 to July 2024. Image courtesy of Rider Levett Bucknall<\/em><\/figcaption><\/figure>\n\n\n\n

The national average increase in construction costs in the second quarter<\/a> was 1.12 percent over the previous quarter. The U.S. national average increase in construction costs was approximately 5.41 percent, compared to 5.85 percent year-over-year in the first quarter.<\/p>\n\n\n\n

Cushman Wakefield\u2019s Research Manager Sandy Romero said this aligns with the U.S. August Producer Price Index\u2019s year-over-year increase of 1.2 percent for nonresidential structures.<\/p>\n\n\n\n

\u201cWith lower inflation rates, prices should continue normalizing, barring any major supply chain disruptions,\u201d Romero told Commercial Property Executive<\/em>.<\/p>\n\n\n\n

Andrew Volz, research manager, project and development services for JLL, said that in JLL\u2019s recent 2024 midyear construction update and reforecast, his firm predicted a modest 1 percent to 2 percent total cost growth for 2024.<\/p>\n\n\n\n

\u201cWe remain optimistic about this tempered growth,\u201d Volz said. \u201cLooking ahead, we expect strong demand for construction as the industry continues addressing changing use patterns in the built environment, particularly around sustainability and technology integration.\u201d<\/p>\n\n\n\n

\n\n\n\n

READ ALSO<\/strong>: CRE Sentiment Index at All-Time High<\/a><\/p>\n\n\n\n

\n\n\n\n

According to Volz, sustained construction activity from public and private sources will keep costs increasing, especially within emerging hotspots.<\/p>\n\n\n\n

\u201cAlthough the recent moderation in cost growth is welcome news for the industry, owners and developers should remain prepared and strategically plan for both near-term fluctuations and long-term trends shaping the construction landscape,\u201d Volz added.<\/p>\n\n\n\n

Aaron Faulk, construction national practice leader for Moss Adams accounting\/consulting, told CPE<\/em> that slowing construction cost increases and interest rate declines provide optimism for increased private sector construction activity.<\/p>\n\n\n\n

\u201cWhile certainly good news, we don\u2019t expect significant new projects or activity in the private sector until mid-2025 at the earliest,\u201d he said.<\/p>\n\n\n\n