June 15, 2016
Construction costs continue to rise across the nation due to limited labor supply, increased multifamily development, and rising materials costs. In the first of its in-depth study, CBRE Group Inc. depicts how the Great Recession’s ripples continue to affect the CRE industry.
Although commodity prices have dropped, local costs for materials like glass, cement and stone, have increased over the last year. Another major driver is the cost of labor. The price is rising because supply is constrained as many workers left the industry during the Great Recession never to return. It’s clear to see the intersection of labor supply, materials costs and multifamily demand when looking at San Francisco, which clocked in with the highest costs nationally.
According to the RSMeans Construction Cost Index (CCI), average total construction costs YOY in the U.S. have increased by 1.8%, while the BLS reports construction-related jobs have fallen by 15.8% (985,000) between 2005 and 2015.