By Roland Murphy for AZBEX
Construction costs in Phoenix continued to increase in Q3, but they rose less on a Year-over-Year basis than any of the other cities tracked in the newly released “North America Quarterly Construction Cost Report” from Rider Levett Bucknall.
RLB’s comparative cost index shows Phoenix with an annual percent change of 3.88% over the year from July 2023-July 2024. The next closest city was Denver at 4.01%. Chicago saw the largest percent change at 6.73%, followed by Boston at 5.87%.
In his introduction to the report, RLB North America President Paul Brussow writes U.S. construction cost inflation is continuing to decline. “The quarterly 1.07% is the lowest in the last three years, and the Year-over-Year change of 4.91% is the lowest level recorded in more than three years.”
Brussow praised the Federal Reserve’s recent interest rate cut, noting it, “is essential to our industry. It signals an effort to avert further cooling of the labor market, and new construction will be in demand. As a result, the current soft readings for construction labor will likely reverse in the upcoming quarters, indicating that the underlying lack of skilled labor will probably continue.”
He cautions, however, “There have (been) ongoing signs of economic slowdown this year, including a continuing softness in billings at architecture firms—a difficult lending environment for construction projects—and persistent weakness in commercial property values. On the other hand, manufacturing-related construction continues to be an exception and has seen the fastest growth in construction spending, like massive investments in chip manufacturing facilities and other industrial projects.”
Phoenix Adds a Crane
Phoenix also added one crane to the latest RLB Crane Index. According to the report, “Phoenix has seen a net increase of one crane since the last count up to eight, with several projects concluding and new ones emerging. A notable addition is the expansion of the Phoenix Theatre Company, part of their 20-year, $70M plan. The majority of cranes continue to serve mixed-use residential high-rises, with an additional crane dedicated to a new parking garage in the busy downtown area, addressing urban density challenges.”
In total, the crane count remains steady across North America. Las Vegas added one crane. Increases were also seen in Honolulu, Chicago, Toronto, Calgary, and Washington, D.C. Los Angeles, Denver and New York City were steady. Decreases were reported in Seattle, Portland, San Francisco and Boston.