Average construction costs across the U.S. rose 4.2 percent last year, with Los Angeles logging the largest uptick, according to a new report.
Costs jumped 7.59 percent from January 2017 to January 2018, followed by San Francisco (6.23 percent) and Portland (6.05 percent), a report by construction consultancy firm Rider Levett Bucknell shows. New York City saw a 3.29 percent increase, putting it behind Las Vegas, Denver, Chicago and Boston. Chicago experienced a 5.35 percent increase. Of the 12 cities tracked, only Honolulu saw a year-over-year dip in costs with a 1.74 percent decrease.
The report notes that while many feared that a new 25 percent tax on steel and a 10 percent tax on aluminum imported from certain countries would hurt the industry, the impact is not yet evident.
“With the suspected exception of a jump in sales of antacid tablets and enrollment in meditation classes, as of this writing, the federal tariffs proposed for imported steel and aluminum have had few quantifiable effects on the marketplace,” Julian Anderson, president of the firm’s North America office, states in the report. “The upshot has been murky, at best, and has resulted in questions that will only be answered over time.”
Those questions include whether or not the changes will lead to a shortage of steel, as was the case after similar tariffs were imposed in 2002, Anderson noted.
Here are average hard construction costs for key submarkets in cities tracked by The Real Deal (South Florida was not included in Rider Levett Bucknell’s report) :
New York City
Prime office: $375-$575 per sf
Multifamily: $200-$375 per sf
Single family: $275-$400 per sf
Retail: $275-$425 per sf
Hotel: $400-$600 per sf
Chicago
Prime office: $280- $450 per sf
Multifamily: $160-$340 per sf
Single family: $220-$420 per sf
Retail: $185-$280 per sf
Hotel: $185-$280 per sf
Los Angeles
Prime office: $225- $340 per sf
Multifamily: $185-$295 per sf
Single family: $190-$335 per sf
Retail: $150-$330 per sf
Hotel: $355-$520 per sf