Dive Brief:
-
The bright outlook for the construction industry hasn’t come cheap.
-
Construction costs outpaced inflation in January, according to an analysis by Commercial Property Executive magazine of Bureau of Labor Statistics data. According to the Engineering News-Record, construction costs rose 2.9% between March 2014 and February of this year, and 3.2% during the prior 12 months.
-
Both labor and material costs were up, as the combination of a skilled labor shortage and growing demand for nonresidential and multifamily buildings have put upward pressure on prices nearly across the board. ENR estimated that wages increased an average of 2.8% over the past 12 months, and more in “especially busy” markets, while the price of rebar, gypsum wall board, reinforced-concrete pipe, and paving asphalt all rose.
Dive Insight:
Some architects, engineers and general contractors are reporting that rising prices have forced their commercial and institutional clients to downsize projects, start them in phases rather than building all at once, or delay construction as higher-than-expected bids come in. And while that might seem like lost profit, contractors in high-demand markets have been passing on the work anyway, as their schedules are fully booked and they’re having trouble recruiting enough qualified crew members to keep up with the contracts they already have.