2023 Summer Construction Market Trends Report Skanska 2023 Summer Construction Market Trends Report

Construction Market Trends

Stay up to date on the dynamics of the construction industry with Skanska USA Building’s Construction Market Trends Report. Explore regional construction escalation insights and forecasts, supply chain lead times, material pricing and critical market indices through this interactive report.

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Summer 2023

Many sectors and geographies remain strong with construction projects, others are tightening based on the business climate of their local markets. In some locations, price levels are stabilizing, but they are not contracting, particularly in markets where construction volume is still very strong. Many project pro formas are complicated by price levels as well as construction financing challenges. Despite being in the most expensive construction environment we have ever experienced, and with the lending challenges noted, the health of the construction industry remains quite strong on the shoulders of growth in infrastructure, data and technology (despite the well-documented turbulence), life science, manufacturing, aviation and education. Commercial office development and residential markets remain the most challenged by interest rate pressures and the office market is contending with high vacancy rates resulting from new flexible work norms. As the federal reserve considers additional interest rate hikes to fight inflation, we believe it is likely that other general industry clients will become more conservative and presently strong sectors may initiate capital spending pullbacks.

Mitigating Risks

The economic shift will impact the stability of contractors. Ensure they remain on solid ground and have the right team leadership and workforce capacity to successfully deliver the work.

Anticipate construction pricing will remain at elevated levels

Much of the supply chain lead time challenges have improved. However, electrical and mechanical equipment—such as switchgear, generators and chillers—remain big challenges. Early purchasing is critical to meet project schedule needs.

The Construction Industry Remains Strong Amidst a Shifting Economy

While the pace of construction escalation may return to traditional industry norms, or even flatten for extended periods, industry indices suggest price levels will not likely recede, notwithstanding a much more severe recessionary period.

Procure mechanical and electrical equipment early

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Steve Stouthamer

Executive Vice President, Project Planning

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Evaluate contractors/subcontractors qualifications

The economic shift will impact the stability of contractors. Evaluate your proposing contractors or subcontractors. Ensure they remain on solid ground and have the right team leadership and workforce capacity to successfully deliver the work.

Evaluate contractors/subcontractors qualifications

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Summer 2023 Construction Pricing Snapshot

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Materials and Commodities

Industry Indices

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13,473

Current Construction Cost Index

8,227

Building Cost Index

+0.4%

1-Month change

+0.6%

1-Month change

Construction Cost Index

Source: Engineering News-Record Data as of August 2023

6,083

Current material price index

+1.2%

1-Month change

Materials Index

Source: Engineering News-Record Data as of June 2023

Construction Cost Index

Spending

Building Cost Index

Materials Index

Labor

Architecture

Employment

Click an index or material to view details

Building Cost Index

Source: Engineering News-Record Data as of August 2023

Source: U.S. Bureau of Labor Statistics All data as of June 2023

Hover over the chart to see exact figures

As of June 2023, the construction industry unemployment rate is 3.6 percent. Employment has increased by 198,000 jobs since June 2022, an overall increase of 2.6 percent. According to Associated Building and Contractors Chief Economist Anirban Basu, “Contractors have collectively added jobs in 15 of the past 16 months.”

U.S. Construction Employment

Source: U.S. Census Bureau and Dodge Data & Analytics All data as of June 2023

Construction starts slipped 9 percent from June to July and are 5 percent below that of 2022. Much of this is attributable to nonresidential starts, which are down 24 percent in 2023. For nonresidential buildings, starts shrank 14 percent in June to $348 billion as manufacturing starts lost a whopping 67 percent. On a year-to-date basis, 2023 nonresidential starts were only 2 percent lower than 2022.

Construction Starts and Dodge Momentum Index

Source: Engineering News-Record All data as of June 2023

Hover over the chart to see exact figures

Skilled Labor Index and Common Labor Index

Both the Skilled and Common labor indices had sharp growth from February through May, influencing the recent climb in the BCI and CCI. However, both labor indices have flattened the past two months which could signal that the BCI and CCI will follow as efforts to slow inflation impact construction volume.

Skilled Labor and Common Labor Indices

Source: AIA, All data as of June 2023

This Architecture Billings Index (ABI) demonstrates whether or not architectural firms are billing for or signing new design contracts. The construction industry feels the impact of this index with a 9-to-12-month lag time.

As of June 2023, business conditions have essentially remained flat for architecture firms with an Architecture Billings Index score of 50.1. Backlogs have decreased to 6.8 months but remain healthy. Nearly all regions of the country report improving business conditions in June. However, firms with multifamily residential and commercial/industrial specialization continue to report softening figures (below 50).

June ABI Report

Architecture Billings Index

Fuels and Natural Gas

Structural Steel Inputs

Concrete and Cement

Drywall, Gypsum and Insulation

Asphalt

Lumber and Wood

Piping

Metals

Fuels and Natural Gas

Source: U.S. Energy Information Administration All data as of July 2023

Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index, Drywall and Insulation data as of July 2023, Gypsum data as of June 2023

Drywall, Gypsum and Insulation

Drywall

Gypsum

Insulation

Source: Steel Benchmarker All data as of July 2023

Structural Steel Inputs

Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index PG 58 data as of July 2023 WPU058102 data as of June 2023

Asphalt

Driven by the impact of OPEC modulation on oil production, oil pricing and downstream fuel costs have fluctuated this summer and while on average unleaded gas and diesel are flat or slightly down, some parts of the country have recently trended up.

$606.79

Current price ($/ton)

+3.7%

Change from previous quarter

260.799

Current index

+15.2%

Change from previous quarter

As the PPI index suggests, we anticipate pricing increases in the upcoming quarter based on infrastructure work and increases in the cost of petroleum products.

After a slight uptick in March and April, steel input pricing has receded from the previous quarter. Fabricated Wide flange shapes have flattened in price, while hollow shapes and plate are down slightly for the year (5-8 percent).

Source: Engineering News-Record All data as of June 2023

Concrete and Cement

Cement and concrete markets have stabilized and availability has greatly improved compared to the last couple of years. However, supply challenges persist in regional markets, where construction activity remains elevated.

PVC: Resin prices continue to fall, translating into lower average PVC pipe prices. Copper: Copper pipe prices remain lower than historic highs in 2021/22 based on continuous raw copper price declines over the past six months. Steel: Overproduction of raw steel has resulted in lower steel pipe prices.

Source: U.S. Bureau of Labor and Statistics Producer Price Index All data as of June 2023

Piping

Modest increases in the lumber market at the start of the year have settled. Lumber pricing continues to hold steady at pre-COVID levels. Continue to monitor housing start trends as a continued climb will impact lumber pricing.

Source: Engineering News-Record and U.S. Bureau of Labor and Statistics Producer Price Index Plywood and 2x4 S4S data as of July 2023 Lumber and Plywood data as of June 2023

Lumber and Wood

Nickel, zinc and aluminum pricing declines continued as inventory levels increased and demand remained down. Pricing of copper ticked up and is forecasted to rise due to anticipated demand for the metal and reduced production out of Chile, its number one producer.

Source: Kitco All data as of July 2023

Metals

Scoring

-50: decrease in volume =50: neutral 50+: increase in volume

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353.0

Current index

-0.2%

Change from previous quarter

359.1

Current index

+1.3%

Change from previous quarter

382.1

Current index

+0.9%

Change from previous quarter

$10.32

Current price ($/sf)

-4.0%

Change from previous quarter

459.48

Current index

-0.9%

Change from previous quarter

$448.17

Current price ($/msf)

+12.6%

Change from previous quarter

$3.88

Current price ($/gallon)

-5.3%

Change from previous quarter

$3.60

Current price ($/gallon)

-0.01%

Change from previous quarter

$2.55

Current price ($/mmBTU)

+18.1%

Change from previous quarter

$1,554

Current price ($/net ton)

-4.5%

Change from previous quarter

$1,074

Current price ($/net ton)

-13.2%

Change from previous quarter

$863

Current price ($/net ton)

-21.5%

Change from previous quarter

The ENR Materials Index jumped in July, supporting the increase in the CCI and BCI indexes. However, this shift does not appear to track with reported price levels from other sources on Steel, Lumber and Cement. That said, the summer increases has the materials index on an annualized pace of +5 percent.

After being nearly flat for eight months, both ENR’s leading indicators, Construction Cost Index (CCI) and Building Cost Index (BCI), have moved up significantly, thus demonstrating a resiliency in the construction market despite price pressures already being felt by projects. Regardless of the summer jump, the BCI index is on an annualized pace of +4.7 percent which is slightly lower then our forecasted projections.

After being nearly flat for eight months, both ENR’s leading indicators, Construction Cost Index (CCI) and Building Cost Index (BCI), have moved up significantly, thus demonstrating a resiliency in the construction market despite price pressures already being felt by projects. Regardless of the summer jump, the CCI is on an annualized pace of +3.3 percent, which is slightly lower than our forecasted projections.

Scoring

-50: decrease in volume =50: neutral 50+: increase in volume

Availability and pricing of drywall, gypsum products and insulation continues to be stable. However, with a surprising jump in housing starts given elevated financing rates (1.6 million in the month of May—the highest level since April 2022), supply may start to tighten.

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Natural Gas

Unleaded Gasoline

Diesel Fuel

Precast Concrete

Prestressed Concrete

Block and Brick

Hot-Rolled Band

Cold-Rolled Coil

Standard Plate

PG 58

WPU058102

173.496

Current index

-3.5%

Change from previous quarter

349.93

Current index

-7.4%

Change from previous quarter

199.514

Current index

-3.5%

Change from previous quarter

PVC

Copper

Carbon Steel

Plywood

2x4 S4S

Lumber and Plywood

263.7

Current index

-1.7%

Change from previous quarter

$915.06

Current price ($/msf)

+4.6%

Change from previous quarter

$1,040.07

Current price ($/msf)

+1.5%

Change from previous quarter

Aluminum

Zinc

Copper

$3.95

Current price ($/lb)

+1.8%

Change from previous quarter

$1.16

Current price ($/lb)

-3%

Change from previous quarter

$1.00

Current price ($/lb)

-13.5%

Change from previous quarter

Nickel

$10.00

Current price ($/lb)

-8.7%

Change from previous quarter

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+2.2%

6-Month change

+2.3%

1-Year change

+17.6%

3-Year change

+2.8%

6-Month change

+3.4%

1-Year change

+31.2%

3-Year change

+3.4%

6-Month change

+2.8%

1-Year change

+71.8%

3-Year change

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Data as of August 2023

Data as of July 2023

Data as of June 2023

Data as of July 2023

Data as of June 2023

Data as of July 2023

Data as of June 2023

Data as of July 2023

Source: Engineering News-Record Data as of August 2023

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Forecasting Local 2023 Construction Costs

This map reflects local USA Building Project Planning Services team leaders’ opinions of market volume and capacity and is not based on published analytics or third-party forecasts.

Click the map pins to see forecast details for a specific city or region.

Miami/Ft. Lauderdale

Seattle

Portland

Orlando

Tampa

New Jersey

New York

Boston

Connecticut

Phoenix

Philadelphia

Washington D.C.

North Carolina/ Virginia

Cincinnati

Atlanta

Nashville

Houston

Dallas

San Antonio

Los Angeles

San Francisco

Boston/New England

In Boston, a backlog of large projects continues to pressure subcontractor capacity through 2024. Subcontractors are being selective in bidding projects instead of the traditional increasing markups. Pricing for MEP trades is seeing unprecedented increases, driving costs up 75 percent post-pandemic and commodity pricing continues to increase at rates above inflation. Additionally, increased lead times are still negatively impacting projects. Some trades have started to flatten and are helping drive inflation back down but not enough to get to normal levels overall. Private multi-unit development projects are still slowing due to ongoing interest rate hikes. Life sciences, healthcare and manufacturing projects are moving forward aggressively, mitigating the decrease in new office construction starts.

Want to discuss the local market position and forecast? Connect with Matt Impastato, Vice President of Preconstruction, Boston.

Markets Still Showing Summer Heat

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Next: Supply Chain

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Market is experiencing significant construction price inflation (+5% per annum)

Market is stable and construction pricing/ inflation is less than 3% per annum

Market is recessed and construction pricing/inflation is flat or negative

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant construction price inflation (+5% per annum)

Market is stable and construction pricing/ inflation is less than 3% per annum

Market is recessed and construction pricing/inflation is flat or negative

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Miami/ Ft. Lauderdale

Seattle

Portland

Orlando

Tampa

New Jersey

New York

Boston

Phoenix

Philadelphia

Washington D.C.

N. Carolina/ Virginia

Cincinnati

Connecticut

Atlanta

Nashville

Houston

Dallas

San Antonio

Los Angeles

San Francisco

Atlanta, GA

With several large data center and manufacturing facility projects—all with large electrical subcontracts—going to contract this year in Atlanta, other upcoming projects in the area will be strained. Lead times for electrical components have not improved, and there is additional pressure on elecrical contractors in this area as a large, long-time union electrical contractor recently closed its doors unexpectedly. Local GCs are looking to offset these challenges by bringing in large electrical firms from surrounding states.

Electrical Equipment Lead Times and Labor Concerns Continue

Want to discuss the local market position and forecast? Connect with Dane Wooley, Preconstruction Director in Atlanta.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Cincinnati, OH

In Cincinnati, it appears we are heading into a more predictable escalation curve as cost escalation is flattening with only residual escalation remaining, which is related to wage increases. Trade partner competition is currently strong as immediate short duration projects are being sought to fill a slight dip in construction until next year’s strong backlog starts. Small and fast start projects will benefit from this competition, but as larger projects get started in the first quarter of next year, we will once again see a strain on the market.

Slower Fourth Quarter Predicted but Backlog Still Strong for 2024

Want to discuss the local market position and forecast? Connect with Jeff Smoker, Vice President of Preconstruction in Cincinnati.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Dallas, TX

While recession warnings continued throughout the first half of 2023, the North Texas market continually observed steady growth, as well as future planned projects, in all market sectors. In healthcare, Children's Health and University of Texas Southwestern has a new 532-bed, $2.5 billion hospital breaking ground in 2024. JPS Health Network plans to build a new ambulatory surgical center as a part of an overall $1.5 billion expansion in Fort Worth. The mixed-use market sector remains hot with notable projects in the pipeline, including the Collin Creek Mall Redevelopment, a phased $1 billion pedestrian-friendly project on 99 acres, and the Newpark-A Smart District, a $3.5 billion multiphase project on a 2-acre site. In the higher education market, Texas A&M Fort Worth has a $4.2 billion five-year capital plan that includes $2.7 billion of projects already in design. A couple of large public projects have been approved including the DFW Airport Terminal C Improvement budget of $4.5 billion and TxS Life Sciences District, a $3.6 billion, 200-acre life sciences development in Plano, which will consist of 4,000,000-SF of lab, office, and therapeutic production space.

North Texas Remains Solid in All Sectors

Want to discuss the local market position and forecast? Connect with Linh Le, Vice President of Preconstruction in Texas.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Washington, D.C.

The D.C. Metro area sees owners pausing projects in some sectors until market conditions improve. Multifamily and healthcare sectors are primarily affected, but even some higher education projects are pausing. The K-12 market remains down slightly but is steady with select projects still moving forward. The supply chain for electrical gear, large generators and HVAC equipment is still strained. Long lead times and continued cost escalation do not appear to be changing any time soon for these items. Labor remains tight and continues to rise at a normal rate. However, developers are seeing buying opportunities for distressed properties, which could turn into construction projects in 2025 and beyond.

Some Sectors Pausing Until Conditions Improve

Want to discuss the local market position and forecast? Connect with Tom Strawbridge, Preconstruction Director in Washington, D.C.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Houston, TX

According to the C.T. Bauer College of Business, there is no recession in the outlook for Houston, just a period of slow growth for the rest of 2023. In healthcare, TMC Helix, a 5,000,000-SF multiphase project with a budget of $2.5 billion continues onward. Other healthcare projects are in the planning stages, including Harris Health LBJ replacement hospital budgeted at $1.6 billion and the University of Texas MD Anderson $668 million laboratory expansion consisting of 600,000-SF feet in the Medical Center. Other notable upcoming projects that are approved with funding secured include the Hobby Airport seven gate expansion with a budget of $450 million and DeisoMoss Tower, a mixed-used, 43-story tower. Although Houston remains active and strong with the number of construction projects ongoing and in the pipeline, we are beginning to see subcontractors pricing more aggressively to secure backlog for 2024.

Slow Growth but No Recession

Want to discuss the local market position and forecast? Connect with Linh Le, Vice President of Preconstruction in Texas.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Construction price inflation is expected to be above normal (3-5% per annum)

Los Angeles, CA

The well-documented struggles of commercial office demand, due largely to the relative stall in the return-to-office movement, have all but snuffed out development in that sector. The market is optimistically embracing the increased focus on infrastructure development and a greater emphasis on sustainability and green building practices. Market trends, including adaptive reuse, technology adoption, and demand for mixed-use developments, will continue to shape the industry and gain more focus. While commodities pricing may continue to fluctuate, firms will need to remain vigilant in managing costs as a more stable supply chain emerges. The ongoing skilled labor shortage will require innovative solutions and workforce development initiatives to meet project demands efficiently.

Challenges Persist, but There are Bright Spots

Want to discuss the local market position and forecast? Connect with Darrell Torres, Senior Preconstruction Director in Los Angeles.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Miami/Ft. Lauderdale

In South Florida, material price stability continues for rebar, metal cladding and plumbing piping, and price has even fallen slightly for light gauge metal framing. However, price of concrete ready mix, tile, insulation and glass continues to escalate. Lead times remain elevated for mechanical and electrical equipment. Additionally, unemployment remains low based on the strong labor market, and trade partners continue to be selective in projects they pursue.

Material Escalation Sways and Trade Partners Remain Selective

Want to discuss the local market position and forecast? Connect with Walt Chislak, Preconstruction Manager in South Florida.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Nashville, TN

Nashville's construction scene remains steady and poised for continued growth in the coming years. Investments by national and international corporations, development firms, institutions, public entities and partnerships sustain a high volume of construction activity for Nashville and middle Tennessee. Many projects see growing timelines as design and preconstruction phases push construction start dates. Continued growth has left its impact in other ways such as in the region’s ability to receive and manage construction waste as well as in provisions for temporary electric utility service to power major equipment, such as tower cranes. Nashville and middle Tennessee remain a hot market and will continue experiencing localized escalation and workforce limitations.

Construction Steady and Poised for Continued Growth

Want to discuss the local market position and forecast? Connect with Adam Hicks, Vice President of Preconstruction in Nashville.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

North Carolina/Virginia

Local trade partners are staying busy and selective in their bidding. While developer work has slowed, the overall pipeline of private projects has remained strong enough to cause some trade contractors to pass on public work entirely. The backlog of large corporate projects—from manufacturing to life science to corporate commercial—continues to be a major draw on resources. Despite this pressure, we are starting to see initial signs of more aggressive bid day results. This is still limited to certain trades, with MEP in particular, seeing more inflated pricing. Overall, the rate of local construction inflation has decreased, and is expected to continue decreasing into next year, before stabilizing at more traditional levels. However, a period of decreasing costs is still not anticipated based on the volume of local work.

Steady Pricing Despite Future Uncertainty

Want to discuss the local market position and forecast? Connect with Will Senner, Vice President of Preconstruction in North Carolina and Virginia.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

New Jersey

Starting in July, New Jersey will limit new construction projects in inland flood-prone areas. Developers and designers must now include stormwater management provisions to account for extreme rainfall projections and future sea level rise. New Jersey Department of Environmental Protection anticipates sea level rise could exceed two feet by 2050 and over five feet by the turn of the century. Under this guidance, grade level floors must now be two feet higher than currently shown on state flood maps and three feet higher on FEMA maps. Five to ten percent of all buildable sites in New Jersey will be influenced by this mandate. Despite this recent direction, planning and construction across most major markets continues to thrive. Healthcare, higher education and state-funded infrastructure upgrades are keeping contractors busy and pricing competitive. Lead times are still problematic for large mechanical and electrical equipment, fan coil units, cold-formed metal framing and elevator controllers, but other building materials have started to normalize to near pre-pandemic levels.

New Rules for Construction in New Jersey’s Inland Flood-prone Areas

Want to discuss the local market position and forecast? Connect with Nick Culver, Vice President of Preconstruction in New Jersey.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

New York, NY

Healthcare in New York continues running at a very busy pace as new RFPs and project starts are the best in the last three years. Mt. Sinai, NYU Langone Health and Northwell Health, three of New York’s largest healthcare providers, continue to expand existing facilities while adding new locations and exploring new options. Conversion of office and retail spaces to Medical spaces has picked up this year. The life sciences sector is also strong with more projects coming online for the remainder of 2023. Additionally, the cultural market sector is a bright spot with a substantial number of new projects out for RFP. Overall, market conditions and supply chain issues still exist, but there is noticeable easing of both materials costs and lead times across all sectors.

Healthcare Still Running Strong

Want to discuss the local market position and forecast? Connect with John Tamborino, Vice President of Preconstruction in New York.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Orlando, FL

The employment rate for Orlando continues to be low for the ninth consecutive month, with a year over year average less than 3 percent. Labor shortage has fueled the competition for qualified craft throughout Central Florida, driving wages higher. Trade partners continue to be selective in projects they pursue, with reports of backlogs full through the end of 2023. Continued escalation in construction costs and increased finance costs have caused some owners to put plans on hold, but this has yet to affect the marketplace. However, we anticipate more competition towards the end of 2023 when backlogs begin to dry up.

Historic Low Unemployment and Strong Backlogs Continue Upward Price Pressure

Want to discuss the local market position and forecast? Connect with Tom Stickrod, Vice President of Preconstruction in Orlando.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

Back to map

Philadelphia, PA

The healthcare market in Philadelphia and South Jersey continues to gain momentum with several new RFPs hitting recently. Life sciences continues to be strong, not only with new lab opportunities, but with new capital projects and office renovations as clients realize the importance of new amenity space to bring staff back to work. Higher education continues to be slow coming back as online learning has changed the thought for college and universities in our market. However, a number of new higher education projects are being contemplated and we expect opportunities to pick up in this sector later this year and in 2024.

Healthcare and Life Sciences Continue to Gain Momentum

Want to discuss the local market position and forecast? Connect with James Lane, Vice President of Preconstruction in Philadelphia.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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Phoenix, AZ

The Phoenix market, and Arizona overall, is still extremely busy as it moves forward on mega projects. However, some market sectors are slowing construction starts due to increasing construction costs, which are being driven primarily by quantity of skilled labor availability. Additionally, there has been some delays on project start dates due to extremely high labor and materials demand. The datacenter market continues to grow and expand due to the availibility of land and power resources.

Still a Hot Market (Even for Phoenix in the Summer)

Want to discuss the local market position and forecast? Connect with Tom Feeney, Vice President of Preconstruction in Phoenix.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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Portland, OR

The Portland metro market pipeline has slowed considerably and competition is picking up. Projects are seeing more proposals and tighter margins. Trade partners are being selective and conservative as they typically do not project backlog our as far as construction managers. Major infrastructure projects—city bridge, interstate bridge and water treatment facility—will consume adjacent resources and may buoy the overall construction market. As a result, prices are steady but not falling. The opening of the Ritz Carlton in August will be a good temperature check on the health of the city's recovery from challenges of the last three years.

Metro Market Pipeline has Slowed and Competition is Picking Up

Want to discuss the local market position and forecast? Connect with Steve Clem, Senior Vice President of Preconstruction in Portland.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

San Antonio, TX

Bexar County, where San Antonio is located, and its adjacent counties comprised one of the top ten growing regions in the U.S. last year, according to the U.S. Census. The market will remain busy supporting this growth with public and bond projects, including the mega $2 billion airport master plan currently out for CMaR solicitation. The five-year forecast for San Antonio’s downtown area already comprises nearly 60 projects, worth over $3 billion in construction, including infrastructure, hospitality, residential and mixed-use projects. However, in the near term, the slowdown in development projects will continue as financing costs and interest rates remain elevated.

Continued Downtown Growth Keeps the Market Busy

Want to discuss the local market position and forecast? Connect with Chris Hillyer, Senior Vice President of Preconstruction in San Antonio.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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San Francisco, CA

The vacancy rate for commercial office space in downtown San Francisco is currently over 30 percent—one of the highest in the country—and is driven by the reluctance of tech workers to commute, as well as the ongoing social economic issues the city is facing. Despite the impact to office space, this strong remote workforce continues to drive the demand for cloud storage, thus new data centers, and neighborhood healthcare facilities. Pricing pressures continue to rise due to the availability of materials and equipment. However, lead times for equipment appear to be easing.

Office Vacancy Rate over 30 Percent

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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Seattle, WA

With cruise season back to pre-pandemic levels, much needed tourism has returned to the Seattle downtown area, re-energizing the retail, hospitality and aviation sectors. This helps offset the tempered starts of new downtown residential and commercial office projects impacted by the high cost and limited availability of financing and the continued struggle of enticing the workforce back to the office. Additionally, local elections in the fall will bring current social-economic challenges to the forefront. Outside of the downtown core, there continues to be plenty of opportunities for new projects, most notably in K-12, mass transit and aviation sectors. New labor agreements and the ongoing shortage of labor, as well as availability of materials and equipment, continue pushing prices up, but more aggressive margins and reduction in costs of lumber and shipping are helping keep them in check.

Welcoming Back Tourism

Want to discuss the local market position and forecast? Connect with Alan Dunbar, Senior Vice President of Preconstruction in Seattle.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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Tampa, FL

The Tampa construction market remains one of the strongest in the country. Large healthcare projects, schools and office/retail spaces on top of the single & multi-family housing boom in Pasco and Hernando counties, have strained the capacity of skilled workers in all trades. With new many new construction projects starting in these sectors, we further anticipate challenges with local material supplies. Experienced teams should engage in continuous and ongoing discussions with trade partners and specifying engineers about long lead items; particularly chillers, AHUs, pumps, fans, generators, transformers and panelboards, while also investigating alternate materials, where feasible, for contingency planning. Teams need to consider early release packages—site, structure, envelope and MEP—to mitigate these challenges while still delivering projects in timeframes that meet customer expectations.

Construction Market Remains Strong, Resource Challenges Persist

Want to discuss the local market position and forecast? Connect with Jeff Courtney, Preconstruction Manager in Tampa.

Local Construction Cost Forecast

Next 6 months

6 months - 1 year

1 - 2 years

Construction price inflation is expected to be above normal (3-5% per annum)

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Market is recessed and construction pricing/inflation is flat or negative

Market is stable and construction pricing/ inflation is within traditional indices (less than 3% per annum)

Construction price inflation is expected to be above normal (3-5% per annum)

Market is experiencing significant/ abnormal construction price inflation (+5% per annum)

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Connecticut

According to the Connecticut State Department of Labor, 2022 saw less than one percent construction growth and 2023 looks similar. Competition is tight as public and private education projects increase. Healthcare and multi-family residential market sectors have healthy pipelines, but private money has slowed due to rising interest rates and market uncertainty. Subcontractors are still protecting their margins, so pricing has not yet started to drop. Additionally, long lead times continue to hamper productivity, causing pressure on pricing for some quoted materials. However, roofing is an outlier as material availability improvement has caused pricing to drop. A return to normal escalation is anticipated over the next few months to a year, with slight potential to be lower than normal.

Construction Growth Low