By Roland Murphy for Arizona Builder’s Exchange
Rider Levett Bucknall has come out with its Q2 North American Quarterly Construction Cost Report, and the Phoenix area continues to do well.
In his introductory overview to the report, RLB President Julian Anderson noted cost escalation is trending well above the Consumer Price Index. He also said, “With labor shortages continuing, we have reason to believe it is limited in nature and easing somewhat. Once the effect of inflation on the value of construction put-in-place is calculated, it would appear that the increase in construction labor is still behind the up-turn in construction activity, but not as much as the raw numbers would suggest,” adding that the shortage appears to specific to certain areas and trades.
RLB reports on both indicative and comparative costs. Indicative Construction Costs are defined as hard construction costs based on dollars/SF of gross floor area. Of the 12 U.S. markets noted in the report, Phoenix consistently ranked at or near the lowest in this category across all eight construction segments the firm follows.
Under the Comparative Cost Index, RLB tracks the “true” cost of construction in the 12 cities and includes such factors as labor and materials, overhead, fees and applicable taxes. Between April 2016 and April 2017, San Francisco saw the highest percent change in comparative costs at 10.99 percent. The lowest, Honolulu, saw a change of -0.26 percent. At 3.5 percent, Phoenix was on par with New York (3.74 percent) and Boston (3.78 percent)
Taken altogether, the national average came out to 1.1 percent.