Archinect - News

Construction costs projected to see largest increase in years due to supply and demand pressures

2022-08-29T15:44:00-04:00

According to CBRE's new 2022 U.S. Construction Cost Trends report, nationwide industry price levels have posted the largest increase in years, driven by labor shortages, inflation, supply chain disruptions, the ongoing impact of the pandemic, and the war in Ukraine.

CBRE forecasts a 14.1 percent year-over-year increase in construction costs by the end of the year, an increase from last year’s 11.5 percent gain. This 2022 figure is the largest increase since CBRE began tracking cost projections in 2007, exceeding the average rise of 2 percent to 4 percent per year. Following 2022, CBRE predicts cost increases to decline back to their historical range at 4.3 percent next year and 2.9 percent in 2024 as supply chain issues, inflation, and material production difficulties ease.

“The construction industry thrives on predictability, but we continue to grapple this year with nume...

San Francisco now tops the most expensive cities to build in the world, new survey finds

2022-07-13T18:30:00-04:00

Turner and Townsend’s latest annual International Construction Market Survey names disruptions in the global supply chain, triggered in part by lockdowns in China due to COVID-19, and rising commodity costs following the invasion of Ukraine as key stress factors for construction markets worldwide.

According to the survey, the 2022 ranking is led by these cities, including four U.S. markets among the top ten:

San Francisco ($4,728.5/sqm)
Tokyo ($4,664.8/sqm)
Osaka ($4,558.5/sqm)
New York City ($4,517.3/sqm)
Geneva ($4,332.2/sqm)
Zurich ($4,285.8/sqm)
Hong Kong ($4,236.5/sqm)
Boston ($3,998.4/sqm)
Los Angeles ($3,981.8/sqm)
London ($3,909.8/sqm)

Driven by strong demand from tech corporations, a strengthening of the U.S. dollar as well as higher material and labor costs, San Francisco moved up from its third place position last year and surpassed Tokyo and Hong Kong as the priciest market for construction with an average cost of $4,728.50 per square meter ($439.29 per square foot).

Many more No...

The high-priced plan to replace the Royal British Columbia Museum is meeting backlash

2022-05-24T18:04:00-04:00

The momentum behind the proposed new Royal British Columbia Museum project said to be Canada’s most expensive in modern history appears to be slowing after Premier John Horgan’s recent announcement “landed with a thud” in political circles and the news media.

The Art Newspaper is reporting that the government’s updated plans to demolish the existing 1968 structure and replace it with a brand new design has levied a considerable amount of backlash in Victoria, British Columbia, where critics are taking a stand against the enormous costs of the project now five years in the making.

Labeled a “billion-dollar vanity project” by local Liberal Party leader Kevin Falcon, the currently $789 million CAD ($615.8 million USD) would author a full-scale modernization of the 135-year-old institution that would leave its doors closed until the year 2030. Horgan has said he laments the project’s newfound status as a “political football,” pointing desperately to its mass timber construction and new ...

Architect Duo Dickinson on the hazards of practicing in the pandemic economy

2021-12-22T18:39:00-05:00

Months of isolation made people rethink the way they wanted to live. That meant their buildings would change. That meant construction, and architects became useful again, after being abandoned. But the craziness of a new era has made all builders and architects simultaneously empowered by their new in-demand status while fully threatened by costs and availability of all the products and people necessary to build.

Earlier in the year, labor and supply chain issues had caused markets in steel and timber to skyrocket, delaying many commercial and residential projects industry-wide, in addition to triggering what some think will be a boom in demand once the pandemic subsides.

However bright the prospects are for some people, architect Duo Dickinson sees recent gains as part of a cycle which has become “insane and dangerous.”

Related Duo Dickinson feature article on Archinect: Everything Is Changing: But Not Architecture’s “Deep State”

“If the past is prologue, this boom shall soon bust,” he wrote. “The anecdotes of recent months are great in the construction world, but the articles and studies have not kept up with a chaotic time. In my little corner of this world, the last season has seen four of my clients dip their toes into building and use my firm to scope out the time and money involved, and when inflated numbers and indeterminable schedules were revealed, they simply opted out, even though...

San Francisco, New York, Boston, and Los Angeles among the ten most expensive cities to build in the world, according to new survey

2021-08-03T19:38:00-04:00

Tokyo ranks as the most expensive city to build in the world, driven by the extensive pipeline of real estate and infrastructure projects pushing up demand for construction resources, according to the report. Following Tokyo are Hong Kong, San Francisco and New York. Boston and Los Angeles rank seventh and ninth, respectively, as both of these markets generally have high labor costs for construction.

According to Turner and Townsend’s 2021 International Construction Market Survey, the top 10 most expensive cities to build, in order, are:

Tokyo
Hong Kong
San Francisco
New York City
Geneva
Zurich
Boston
London
Los Angeles
Macau

With increased activity levels in construction markets in 2021 as the world recovers from the covid-19 pandemic, supply chain constraints are increasing and skill shortages are worsening, resulting in substantial construction cost inflation, as detailed by Turner and Townsend. International border closures have impacted the availability of imported labor, which has been detrimental to construction markets that depend on migrant workers.

Previously on Archinect: According to ABC chief economist, construction industry is rebounding despite high prices and lack of skilled labor

In addition, more than a third of respondents to the survey said the pandemic has had a high or significant impact on their supply chains. This is evident in increased material costs, such as st...

Construction costs on the rise in major US cities, new report shows

2021-01-28T13:29:00-05:00

A new report details how construction costs have changed across 12 U.S. cities since the coronavirus pandemic began. Broken down by market, all of the U.S. cities in the Rider Levett Bucknall report saw at least small gains, except for Chicago, which experienced a 1.29% decrease in comparative costs from October 2019 to October 2020.

According to Construction Dive, the new report by construction consultancy firm Rider Levett Bucknall signals a 2.03% increase of the national average for construction costs.

The survey tracks the RLB Comparative Cost Index for major cities across the United States and found the biggest cost increases in Los Angeles, San Francisco, New York, Boston, and Seattle. Costs in Phoenix, Honolulu, and Washington, D.C. saw smaller gains. A drop in comperative costs was reported in Chicago.

Amid contractor competition and COVID-19, construction costs fall for the first time since 2010

2020-07-22T16:09:00-04:00

A new report from Turner Construction Company highlights an unexpected trend that has taken shape in recent months: lower construction costs for non-residential projects.

According to Turner's quarterly Building Cost Index, construction costs decreased during the second quarter of 2020 by 1.01%, reversing a nearly equal increase seen during the first quarter of 2020.

Describing the contents of the report, Attilio Rivetti, the Turner vice president responsible for compiling the Cost Index, explains, “Trade contractor competition has increased in many areas as they work to secure backlog due to uncertainty they have about future opportunities. We expect the third quarter will serve to more clearly define the fluctuation of escalation of cost in the construction industry."

Trump threatens to tax all Chinese-produced goods

2019-08-02T12:58:00-04:00

According to The Wall Street Journal, President Donald Trump is moving to escalate America's trade war with China by imposing new tariffs on all Chinese-made products imported into the country.

Currently, the administration's tariff-loving trade policy has been limited mostly to industrial goods—one of several reasons why construction costs have escalated drastically over the last few years. According to The Wall Street Journal, President Trump said, “If they don’t want to trade with us anymore, that would be fine with me."

Myron Brilliant, head of international affairs at the United States Chamber of Commerce told The Wall Street Journal, “Tariffs are not the answer, escalation is not the answer. We have to be careful about actions undertaken by either government that would stir the pot and not create the best atmosphere for getting these complicated talks back on track.”

As the American Institute of Architects (AIA) indicated recently in an economic forecast for the coming 18 mon...

California's housing goals pull further out of reach

2019-07-23T19:17:00-04:00

California communities are approving residential building permits at a slower rate than they did last year, a sign Gov. Gavin Newsom faces an even bigger hurdle to reach his housing goals than when he took office in January. In the first five months of 2019, cities and counties issued permits for an average of 111,000 residential building units per year, according to data released Friday by the California Department of Finance. That’s a decrease of 12.2 percent from the same period in 2018.

The news is mostly bad for California governor Gavin Newsom's plan to build 3.5 million new housing units by 2025, as high land costs, a labor shortage, the effects of President Trump's tax cuts, and virulent NIMBYism threaten to stamp out regulatory reforms enacted over recent years.

“These days you see most interest in the luxury apartments in places like downtown San Francisco, because otherwise the rents don’t pay for the high cost of construction,” Matt Schwartz, president and CEO of the California Housing Partnership, told The Sacramento Bee, adding, “Yes, rent has gone up, but construction costs have gone up two to three times as much.”

Major flaws in Elon Musk's public transit plans for Los Angeles

2018-08-31T15:23:00-04:00

Elon Musk, the CEO of Tesla and SpaceX, is back at it again with more outlandish ideas to solve Los Angeles' traffic. Earlier this month, Musk's latest venture–The Boring Company–resuscitated its flawed proposal to dig new car tunnels for Los Angeles, this time to connect the Red Line subway with Dodger Stadium [...] The Chicago tunnel idea is bad enough, but the Dodger Stadium plan is exceptionally poor even if one takes Musk's promises at face value.

Alon Levy pokes holes in Elon Musk's public transit plans for Los Angeles. Musk's plan involves tunneling under Sunset Boulevard between the Dodger Stadium and one of three Red Line stops: Vermont/Sunset, Vermont/Santa Monica, or Vermont/Beverly. Levy cites major issues with construction, capacity, alignment with the city's existing transit, and overall regional impact.

A 2,500% budget overrun: the story of the Bay Bridge's dramatic cost inflation from $250M to $6.5B

2015-10-15T15:46:00-04:00

With Frick and her book [Remaking the San Francisco-Oakland Bay Bridge] as guide, CityLab tracked bridge expenses over time to get some sense of how the project that Herbert Hoover once called “the greatest bridge yet constructed in the world” became yet another example of a major public works project in which the cost ended outrageously higher than it began—and some ideas for what to do about it.

Zaha Hadid isn't the only one who has suffered from hugely inflated construction estimates: back in 1995, Caltrans estimated that it would only cost $250 million to retrofit the earthquake-damaged Bay Bridge. Eleven years and several construction estimates later, that figure had swollen to $6.5 billion, and some officials feel that it may rise as high as $13 billion after all the interest and financing costs are tallied up.

Berlin's $6 billion airport drama

2015-07-28T15:22:00-04:00

The architecture and engineering teams fought to keep up. As the terminal ballooned from 200,000 to 340,000 square meters (dwarfing Frankfurt’s 240,000 and just shy of Heathrow Terminal 5’s 353,000), they parceled out the work to seven contractors. That soon grew to 35, and they brought in hundreds of subcontractors, says Delius. [...] At the very moment Merkel and her allies are hectoring the Greeks about their profligacy, the airport’s cost, borne by taxpayers, has tripled to €5.4 billion.

Zaha Hadid: My design for the New National Stadium is not the problem

2015-07-28T13:08:00-04:00

According to a statement issued on Zaha Hadid's website, the project-ending cost of the New National Stadium is not the fault of the design, but rather the "inflated costs of construction in Tokyo, a restricted and uncompetitive approach to appointing construction contractors, and a restriction on collaboration between the design team and appointed construction contractors." The stadium, whose controversial design has spawned a series of derisive memes, was shut down after officials announced the cost would be 250 billion yen (approximately $2 billion U.S. dollars). The cost shocked design committee chairman Tadao Ando, who made a similar statement about the inflated construction costs in Japan.

In her statement, Hadid goes on to say that the arched roof structure was carefully designed so that it could be built in tandem with the seating bowl, and by Japanese engineering and design team estimates should only cost 23 billion yen. Hadid also notes that due to an increase in the price...