Colorado Real Estate Journal - January 21, 2015
Rider Levett Bucknall, international property and construction consultant and an industry leader in cost research, reported that the estimated growth rate for U.S. construction is expected to rise approximately 10 percent – nearly double the estimated growth rate for 2014. Strong commercial building and residential markets are contributing to this projected increase, according to the firm’s Fourth Quarter 2014 USA Construction Cost Report. The firm’s research indicated that improved construction financing and investment, along with stronger commercial building and residential markets, are driving continued growth within the industry. According to the U.S. Department of Commerce, construction put in place during October was estimated at a seasonally adjusted annual rate of $950.9 billion, which is 0.4 percent below the revised August estimate of $955.2 billion. The September figure is 2.9 percent above the September 2013 estimate of $924.2 billion. The value of construction during the first nine months of this year was $710.1 billion, 6.1 percent above the same period in 2013. The firm anticipates that commercial and institutional buildings, single and multifamily housing, industrial and manufacturing will most likely show the largest growth over the next 12 months while public infrastructure work could show more modest gains. Rider Levett Bucknall tracks construction costs in 12 major U.S. cities, including Denver. From July 1 and Oct. 1, 2014, the national average quarterly increase in construction cost was 1.66 percent. Honolulu, Los Angeles, Portland, Oregon, and San Francisco all experienced significant increases in excess of 2.1 percent for the period. All other locations also experienced gains, including Denver, which saw an increase of 1.03 percent. The quarterly increase in construction cost was the largest since early 2008. For much of 2014, the lack of skilled labor created a strain on the construction industry in some regions, particularly in the oil boom states and in cities such as New York and Honolulu. Rider Levett Bucknall’s report also notes that the continued lack of available skilled construction workers to support increased demand within the industry, combined with rising demand for materials, equipment and industry professionals, will continue to fuel rising construction costs nationwide. “While the estimated growth rate of the U.S. construction industry for 2015 is encouraging news for the nation’s economy, developers should continue to plan for cost increases even though the cost of fuel and commodities is currently under downward pressure,” stated Julian Anderson, president of Rider Levett Bucknall North America.