Archinect - News

Hike in fuel costs drives first increase in construction input prices in six months

2023-09-18T08:00:00-04:00

Construction input prices ticked up 1.5% in August, the first increase in six months, due to a surge in energy costs, according to a new Associated Builders and Contractors’ analysis of U.S. Bureau of Labor Statistics Producer Price Index data released Thursday.

These readings come as a shock as the flattening of costs suggested that inflation was cooling. According to a separate analysis from the Associated General Contractors of America, a major increase in diesel fuel costs in August drove the overall increase in materials prices. The producer price index jumped 34.6% last month, which is the largest one-month hike since 1990. In addition, other construction materials such as concrete and switchgear also experienced price increases.

Associated Builders and Contractors (ABC) chief economist Anirban Basu expects future readings to demonstrate excess inflation as labor costs continue to rise, aggressive spending continues, oil-producing nations limit output, and global supply chains reorganize.

Rental apartment construction in the U.S. is at a 50-year high

2023-09-07T13:03:00-04:00

New rental apartment construction in the United States is expected to top a 50-year high in 2023. According to a report by RentCafe, nearly 461,000 units are expected to be delivered across the U.S. this year, meaning that over the past three years, 1.2 million units will have been built and brought to the market.

According to RentCafe’s analysis of Yardi Matrix data, the number of deliveries is expected to remain high until 2025, at which point the impact of current economic uneasiness will filter through to construction.

The New York metro area leads the country in terms of apartment construction, with 33,000 units to be opened in 2023. Almost one-third of the apartments will be located in Brooklyn (9,825), followed by Queens (4,430) and Manhattan (3,770).

Beyond New York, the Dallas metro area is the second most active, with 23,659 new rental units to come to market. The Dallas metro area has seen the most new apartments opened over the last three years, at 76,660 units. Other st...

Demand for construction workers remains high as overall U.S. labor demand dips

2023-09-01T17:47:00-04:00

The nationwide demand for labor is dulling, but construction still faces a shortage of workers. Construction counted 363,000 job openings at the end of July, according to the Bureau of Labor Statistics, a decrease of 23,000 jobs from June.

As noted by the chief economist for Associated Builders and Contractors (ABC), Anirban Basu, job openings, across all industries, are at the lowest level since March 2021, and the rate at which workers are quitting their jobs has returned to the pre-pandemic norm. The demand for construction workers, however, still remains high. Last month's 363,000 job openings are still 10,000 more than the amount during the same period last year.

The recent dip in labor demand has been attributed to continued inflation and higher interest rates. According to Construction Dive, ABC members have indicated that they will still increase hiring efforts and are unlikely to lay off workers. Money entering the construction industry through legislation aiming to spur major projects is straining the pool of labor as contractors are competing for the same skilled workers.

To browse the latest architecture career opportunities, head to Archinect Jobs.

Quality-of-life benefits increasing in architecture firms, but compensation lags behind inflation, says AIA report

2023-08-30T13:51:00-04:00

The AIA has released what it describes as its “most comprehensive report on architecture firm compensation and benefits trends in 15 years.” The 2023 edition of the AIA Compensation & Benefits Report includes an analysis of how firms have addressed rising inflation, staff shortages, increased financial pressure, and the impact of such pressures on recruitment and retention.

The report found there to be a rise in “quality-of-life benefits” at firms, particularly casual dressing policies, child-friendly and pet-friendly offices, flexible work hours, work-from-home opportunities, and adopting Juneteenth as a paid holiday. 57% of firms also reported hiring students for part-time work in 2022, an increase from 35% in 2020.

A greater emphasis on equity, diversity, and inclusion was noted at firms, with 73% of large firms reporting having internal values-based employee committees and resource groups. 66% of large firms also conducted salary assessments by gender in 2022, and 62% by race.

...

Construction materials prices fell a percent in November in recent report

2022-12-12T14:02:00-05:00

According to a recently released analysis of U.S. Bureau of Labor Statistics Producer Price Index data by Associated Builders and Contractors (ABC), construction input prices have fallen 0.9% in November from October readings. Additionally, nonresidential construction input prices fell 0.8% in November.

Though the decline in materials prices is positive news, they are still up nearly 40% since February 2020. Construction input prices are up 11.9% from this time last year, with nonresidential construction input prices 11.5% higher. However, input prices increased in only four of the 11 subcategories on a monthly basis. Natural gas inputs saw the largest decrease in prices, falling 15.8% last month, while unprocessed energy prices dipped 7.8%, and crude petroleum prices declined 2.3%.

Graphic: U.S. Bureau of Labor Statistics / Associated Builders and Contractors

“The decline in wholesale prices for many construction inputs is generally positive news,” said ABC Chief Economist Anirban...

Construction will stagnate in 2023 as recession looms, warns Dodge Construction Outlook

2022-11-17T11:59:00-05:00

The Dodge Construction Network has produced a forecast for the U.S. construction sector for 2023, in which it signals a slowdown across many typologies. Overall, the dollar value of construction starts will be $1.08 trillion, which, though unchanged from 2022, represents a 3% dip when adjusted for inflation.

Dodge’s analysis suggests the stagnation will not be felt evenly across the industry, with declines in residential and commercial activity offset by growths in manufacturing and infrastructure.

The dollar value of single-family homes starts will hold steady in 2023 versus 2022, which, when adjusted for inflation, represents a decline of 5%. The number of single-family housing units is expected to decline by 6% to 891,000 units, a fall fuelled by higher mortgage rates and continued high construction costs.

The multifamily sector will show similar stagnation with a 1% rise in the value o...

San Francisco planning to build $1.7 million single-toilet public restroom

2022-10-31T11:49:00-04:00

A single-toilet public restroom planned for San Francisco’s Noe Valley Town Square is expected to take two years to build, but it’s already causing a stink. The reason: its $1.7 million price tag.

The proposed restroom would sit within a 150-square-foot enclosure within the town square, located in central San Francisco. While there are no designs for the project available, it is expected to be delivered by 2025. According to the city, the high price tag is meant to account for unexpected costs, including the rise of construction costs due to the pandemic, inflation, and global supply chain issues. This is in addition to being located in the most expensive city in the world to build in. As reported by the Los Angeles Times, San Francisco is also wary of costs from utility company PG&E, which owns the power lines used by the city’s public utility. The company has a history of stalling projects, forcing customers to buy specialized equipment to handle large amounts of electricity.

The project's massive cost and the lengthy timeline were met with outcry, which led California Assemblyman Matt Haney, who secured state funding for the project, to cancel a planned ceremony for the t...

'Housing sector is in a recession' warns leading construction economist

2022-10-13T12:16:00-04:00

A leading economist in the AEC industry has warned that the United States' housing sector has entered a recession, with ramifications for homebuilding in the coming years. Robert Dietz, chief economist at the National Association of Home Builders (NAHB), made the comments at the National Association of Real Estate Editors’ annual conference in Atlanta, GA this week.

“What I think is beyond denial right now, beyond debate, is the fact that the housing sector itself is in recession,” Dietz told the conference. “We had two negative quarters of GDP earlier this year, we’ll soon see a positive quarter in the Q3 report, but then we’ll have negative growth in Q4 and the first two quarters of 2023.”

Archinect Feature: Op-Ed: Don’t Waste A Recession

Dietz’ pessimism about the industry is fuelled by the NAHB’s National Homebuilder Sentiment Index, a metric which, similar to the AIA’s Architecture Billing Index, is used as a bellwether for the industry’s performance. “It’s fallen for nine stra...

Construction starts dropped 9% in August despite promising gains in the manufacturing and residential sectors

2022-09-23T11:56:00-04:00

The latest Dodge Construction Network figures show a decline in construction starts by 9% after a July spike that was propelled mostly by the nonresidential and nonbuilding sectors.

Total starts now stand at an adjusted annual rate of $1.25 trillion. The August dip was caused by a 36% decrease in nonbuilding starts and minor increase in residential starts, which was recorded at only 1%. Year-to-date construction is now 16% higher in the first eight months of 2022 than it was in the same period of 2021, with nonresidential starts up 35% on the year overall.

The largest nonbuilding projects that commenced in August were the $1.9 billion third phase of the New Soo Lock Chamber in Sault Ste. Marie, MI, a $738 million paving project in Honolulu, HI, and a $460 million first phase wastewater treatment project plant in the same city. Gensler's $9.5 billion JFK Terminal One project led the nonresidential list, followed by the $8.5 billion Samsung semiconductor plant project in Texas, and t...

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...

New York City projected to construct the most apartments nationwide in 2022

2022-08-26T14:08:00-04:00

According to a new report by apartment search website RentCafe, New York City is projected to deliver the most newly-built apartments in 2022, claiming the top position for the first time since 2018.

Despite pandemic-induced setbacks in the last two years, New York City is expected to provide a record 28,153 brand new rental apartments by the end of the year. This figure is out of the 420,000 new rental units projected to be completed this year nationwide. It is also nearly 50% higher than the number of apartments that were completed throughout the city in 2021.

Across the United States, the projected new rental units to be built this year represented a historic 50-year peak. According to RentCafe, this construction boom is driven by greater demand for apartments as renters hold off on purchasing homes due to soaring inflation and rising interest rates.

Previously on Archinect: America's largest cities have seen a spike in commercial and multifamily construction starts during fir...

Covid-era bubbles and today's inflation driving heavy volatility of lumber prices

2022-08-22T10:41:00-04:00

Since the COVID-19 pandemic began, multifamily developers and builders have had their work cut out for them as they try to budget for their lumber needs. After months of wild fluctuations, lumber futures fell to their lowest level in a year earlier this month, according to lumber price data from NASDAQ. They have since reversed course, and currently stand at just under $600.

As reported by Multifamily Dive, two pandemic-induced bubbles, in which lumber futures rose to record highs in the thousands of dollars, popped, dropping to below $500. The producer price index, a measure of the average changes in prices received by producers, for softwood lumber fell 22.6% in June of this year and 35% overall between March and July 2022. Measured by the U.S. Bureau of Statistics, prices for the material have never exhibited more than 10% volatility in a given month until early 2020, when lumber costs jumped 20%. Since then, the price volatility for lumber, at its higher points, has ranged from 25% to 30%.

It is believed that one of the reasons behind these recent decreased lumber prices is the impact of inflation on industries that depend on lumber. Specifically, the housing industry has been hit by higher interest rates and costs, which has affected the demand for lumber.

A look at the Inflation Reduction Act’s potential impacts on the Landscape Architecture community

2022-08-16T12:45:00-04:00

A new report from the American Society of Landscape Architects (ASLA) has outlined the potential impacts and trade benefits of the provisions included in the Biden Administration’s recently passed Inflation Reduction Act of 2022, that is set to be signed into law in the coming days.

The $369 billion bill includes many grants and other types of funding for a host of green GSA-owned properties, Federal Highway Administration projects, and affordable housing developments. Over on the ASLA’s The Dirt blog, Roxanne Blackwell and Caleb Raspler broke down what it might entail for the landscape architecture community in separate practice and client areas.

Among the relevant provisions included in the overall package are:

More than $4.5 billion to be directed toward water infrastructure (dams, water treatment facilities, etc.). This includes the $4 billion in drought relief funds, another $15 million to "provide technical assistance for climate change planning, mitigation, adaptation, and r...

Inflation Reduction Act is ready to make climate impact on building sector

2022-08-15T12:37:00-04:00

Industry groups are applauding lawmakers after the passage of the Biden Administration’s recently proposed Inflation Reduction Act of 2022, pointing to its more than $5 billion in provisions they say are “critical” to enacting climate change-related policies and modernizing transportation infrastructure across the United States.

Once implemented, the bill, officially titled H.R. 5376, will help incentivize the use and development of low-carbon building materials in government buildings as well as provide grants and other forms of funding that will aid in the country’s effort to match CO2 emissions mandates outlined in the Paris Agreement from 2015.

In a statement, U.S. Green Building Council (USGBC) president Peter Templeton commented that “the Inflation Reduction Act would put in place the most critical and consequential climate policies we have ever seen, and it would do so while reducing energy costs for American families and businesses and shoring up our energy security with a ...

America's largest cities have seen a spike in commercial and multifamily construction starts during first half of 2022

2022-07-27T15:44:00-04:00

A new report from the Dodge Construction Network indicates the continued rebound of the building industry in 12 of America’s 20 largest metropolitan areas during the first two quarters of 2022, propelled by new starts in the commercial and multifamily residential sectors.

A survey at the year’s midway point revealed a 24% year-to-year increase in the value of all new starts within those two sectors, which were driven by demand for housing that is increasingly focused on more affordable apartment and condominium designs. The increases offer a strong indicator of continued performance of the industry through the rest of the year, according to Dodge Construction Network chief economist Richard Branch.

Previously on Archinect: Commercial and multifamily construction starts reflect nationwide recovery in 2021

Only three of the top 10 areas surveyed — Seattle, Los Angeles, and Philadelphia — were in decline as the starts in the rest of the country rose a total of 18% when compared to the ...

Resilience in nonresidential building sector drives increase in May construction starts

2022-06-27T15:26:00-04:00

In a new Dodge Construction Network report, total construction starts rose 4% in May to a seasonally-adjusted annual rate of $979.5 billion. Nonresidential building starts rose 20%, while residential and nonbuilding starts declined 4% and 2%, respectively.

In the first five months of 2022, total construction was 6% higher compared to the same period of 2021. Nonresidential building starts rose 17% and residential starts gained 3%, with nonbuilding starts falling 5%. For the 12 months ending May 2022, total construction starts were 10% above the same period ending May 2021. Nonresidential starts saw a 20% increase, residential starts gained 8%, and nonbuilding starts fell 3%.

Graphic courtesy of Dodge Construction Network

“The construction sector has become increasingly bifurcated over the past several months,” said Dodge Construction Network chief economist Richard Branch. “Nonresidential building construction is clearly trending higher with broad-based resilience across the commerc...

A new Census Bureau/HUD report has construction starts rising again despite high mortgage rates

2022-04-19T16:02:00-04:00

The residential housing market continued its remarkable ascension in March, according to a market report published this week by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). The report indicates some more positive news for the industry in the face of several attendant economic issues including rising inflation and a tough labor market.

Overall, housing starts went up b 0.3% to 1.788 million in a continuation of recent market trends that have bucked the simultaneous increase in material prices and mortgage rates, which are at an eleven-year high. The March figure is 3.9% higher than the same period last year, and significantly higher than the 1.216 million starts registered at the beginning of the pandemic in March 2020.

Previously on Archinect: The pandemic is causing a host of changes in multifamily unit design

“Even with rising interest rates and ongoing issues surrounding geopolitical stability, supply chain issues, and inflation, the overall l...

Construction prices experience largest monthly increase since June, finds new analysis

2021-11-12T15:41:00-05:00

According to an Associated Builders and Contractors (ABC) analysis of the recently-released U.S. Bureau of Labor Statistics’ Producer Price Index data, construction input prices increased 1.5% in October. Nonresidential construction input prices have increased by 1.4% in the month.

Compared to October 2020, construction input prices are 21.1% higher this year, with nonresidential input prices increasing by 22.3% over this period. Other major price increases since October 2020 include steel mill products increasing by 141.6% and iron and steel prices up 101.5%. The only decrease in prices over this timespan is softwood lumber.

Previously on Archinect: Lumber prices are falling fast after COVID-19 disruption

With this dramatic price increases, ABC Chief Economist Anirban Basu seems less optimistic about the construction industry's rebound compared to his projections in the summer.

“Any notion that the bout of pandemic-induced inflation was simply transitory has gone by the wayside,”...

British construction criticised for lack of innovation by government report

2016-10-20T11:47:00-04:00

The review highlights the sector’s dysfunctional training model, its lack of innovation and collaboration, and its non-existent research and development culture. Low productivity continues to hamper the sector, while recent high levels of cost inflation, driven by a shortage of workers, has stalled numerous housing schemes as they have become too expensive to build.

Average 1950s NYC apartment rented for $60/mo, about $530 in 2015 dollars

2015-08-21T09:12:00-04:00

With the US median wage at $5,000 a year, New Yorkers spent 1/10 of their salaries on rent [in the 1950s]...These days a depressing number of young New Yorkers spend over half their income on housing. Rent hikes have transformed a once-democratic city into a playground for the privileged.

Don't adjust for inflation: it will just depress you. This article in The Los Angeles Review of Books historically traces the drastic rise of housing costs for renters from the middle of the 20th century to the present day through a series of inflation adjustments, edgy banking moves, and the morphing shape of the economy.

For more on this topic:

• A little reminder that U.S. rent affordability is at its worst, according to Zillow

• Shipping container village crops up in Oakland, offering alternative to sky-high SF rents

• 500 Square Feet and Falling