The nation’s construction industry is continuing to recover, primarily in the housing construction sector, according to the latest construction cost report from property and construction consultant Rider Levett Bucknall.
The commercial, hospitality and business industries are planning for construction growth throughout 2013 while the health-care and manufacturing industries should see steady improvement throughout the latter half of 2013. Denver has experienced a quarterly increase in “in-place” construction costs of 0.6%, slightly below the national average.
“Construction employment show signs of improvement, albeit modest to date,” said RLB Executive Vice President and Director Peter Knowles. “Of particular interest is the potential for several downtown, privately funded projects to get ‘dusted off’ and reintroduced into the marketplace.
“Construction financing continues to be available for those developers meeting the more stringent loan requirements; however, more concrete signs as to the well-being of the general economy need to be experienced before these proceed into construction,” Knowles added. “A careful watch should be placed on the availability of construction resources to meet this pent-up demand and its possible effect on the price of construction.”
RLB’s findings suggest that between January 1 and April 1, the national average increase in construction was approximately 1.05%. The value of construction for the first three months of 2013 was $181.7 billion, 4.7% above the same period in 2012.
All 12 of the U.S. cities where RLB tracks construction costs experienced a positive change since the first quarter of this year. Boston, Honolulu, New York and Washington, D.C. experienced the greatest annual increase, showing an escalation between 1.45% and 1.97 %, while Chicago, Denver, Las Vegas, Los Angeles, Phoenix, Portland, San Francisco and Seattle experienced a more modest increase below 1.0%.
“Although the construction industry continues to show improvement, driven mostly by the housing market recovery, many sectors remain stagnant,” said RLB President Julian Anderson. “One noticeable aspect of the current market is the degree to which inflation is manifesting itself on a regional, rather than on a national basis for the third consecutive quarter.
“This is consistent with Federal Chairman Bernanke’s view that the factors currently keeping general inflation low are transitory and that inflation in the general economy is expected to increase modestly over time,” Anderson said. “Rider Levett Bucknall’s view is that once the construction industry recovery becomes more even, construction inflation too will begin to rise.”