- Last week, just a day after the City of Seattle officially scored a National Hockey League franchise, construction started on the $850 million KeyArena overhaul at Seattle Center, KING 5 reported. The price tag has increased by $150 million from earlier estimates of $700 million.
- Rising construction costs, particularly for labor, as well as the project’s design, are responsible for a large chunk of the extra expense, according to Tim Leiweke, CEO of Oak View Group, which is privately investing $1.6 billion for the massive renovation. Oak View will cover any cost overruns, according to KING 5. Not included in the revised estimate is the up to $100 million it will take to build a team headquarters and a three-rink training facility elsewhere in Seattle.
- Reported concerns about the timing of the construction schedule resulted in the NHL pushing back the new team’s opening day to the 2021-2022 season. Leiweke said this would allow construction to proceed at a less frantic pace, resulting in fewer disruptions to the surrounding neighborhood. Even so, Oak View estimates that the arena will be complete in April or May of 2021, allowing concerts and other events to take place in the new venue before the start of hockey season.
Back in July, Oak View hired the joint venture of Skanska USA and AECOM Hunt to serve as general contractor for the project, which will see the preservation of the structure’s historic roofline but a total rebuild underneath. In addition to the construction of a new 19,000-seat arena, planned work includes a new atrium lobby entrance and underground parking garage as well as the demolition of five buildings, two existing plazas, a surface parking lot, a loading area and a skate park. Seattle will own the new arena, but Seattle Arena Co., of which Oak View is a member, will lease and operate it for 39 years.
The increased costs of construction are not just affecting projects in Seattle but all across the U.S., as well as in international markets.
Turner Construction tracks these increases through its Building Cost Index, and the latest report has labor and materials for the nonresidential sector up 5.8% year over year as of the third quarter of 2018. Since 2011, Turner’s index has reported steady cost increases, and, at the current pace, 2018 is on track to beat 2017’s 5% increase by approximately one point or more.