National – Rider Levett Bucknall – international property and construction consultants, and industry leader in cost research – reports that theestimated growth rate for U.S. construction is expected to rise approximately 10%, 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 findings, which were published in its newly released Fourth Quarter 2014 USA Construction Cost Report.
The firm’s research indicates 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 2014 was estimated at a seasonally adjusted annual rate of $950.9 billion, which is 0.4% below the revised August estimate of $955.2 billion. The September 2014 figure is 2.9% 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% above the same period in 2013.
Commercial, residential sectors drive growth; average cost increases highest since 2008
The firm anticipates that commercial and institutional buildings, single and multi-family housing, industrial and manufacturing will most likely show the largest growth over the next twelve months while public infrastructure work could show more modest gains.
Rider Levett Bucknall tracks construction costs in 12 major U.S. cities. From July 1, 2014 and October 1, 2014 the national average quarterly increase in construction cost was 1.66%. Honolulu, Los Angeles, Portland and San Francisco all experienced significant increases in excess of 2.1% for the period. All other locations also experienced gains ranging from 0.93% in Las Vegas to 1.77% in Washington DC. The quarterly increase in construction cost was the largest since early 2008.
Need for labor, materials, equipment, and professionals to fuel rising costs, firm warns
For much of 2014, the lack of skilled labor has 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 encouraing 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,” states Julian Anderson, president of Rider Levett Bucknall North America.
