TRD Insights: Construction costs have kept rising during pandemic

San Francisco’s lead on NYC continues to grow; industry unemployment spiked early then recovered

New York Insights /
Aug.August 03, 2020 07:30 AM
A new report shows that construction costs have kept rising during the pandemic but that unemployment in the industry, which spiked early, has recovered somewhat. (Getty; iStock)

A new report shows that construction costs have kept rising during the pandemic but that unemployment in the industry, which spiked early, has recovered somewhat. (Getty; iStock)

The construction industry was hit hard by the pandemic, with many construction sites across the country shutting down as the coronavirus began intensifying.

The latest quarterly report from construction consultancy firm Rider Levett Bucknall shows that unemployment in the industry spiked in the early days of the crisis but then recovered somewhat, and did not reach levels seen after the 2008 financial crisis.

Meanwhile, construction costs continued to grow inexorable, albeit at a slower pace.

RLB’s research shows that construction costs have continued to grow, as its national construction cost index rose by 0.84 over the past quarter — well below the 2.2-per-quarter growth rate of the past five years.

California markets saw costs increase the most, as San Francisco — which surpassed New York last year as the most expensive city to build in — increased its lead, and Los Angeles overtook Washington D.C. to land in sixth place among the 12 cities tracked by RLB.

Unemployment in the construction sector has always been seasonal, peaking in winter and falling in the summer. But “at the onset of the coronavirus, we saw construction unemployment rise to 6.9% during March; a higher rate than expected despite the anticipated cyclical peak,” the report says. “This dramatic influx of unemployment came as a result of construction job sites shutting down and trades being furloughed or laid off until it became safe to work again.”

Construction unemployment rose further to 16.6 percent in April before falling to 12.7 in May. “We anticipate that construction unemployment will continue to decrease as job sites open back up, though we do not expect that the rate will get as low as it was, pre-pandemic.”

Data from the U.S. Bureau of Labor Statistics shows that construction sector unemployment was significantly worse in the years following the financial crisis, reaching a peak of 27.1 percent in February 2010.

(Credit: U.S. Bureau of Labor Statistics)

(Credit: U.S. Bureau of Labor Statistics)

According to data released by the Small Business Administration in July, the construction sector was among the largest recipients of forgivable Paycheck Protection Program loans, receiving more than 470,000 loans totalling $64 billion, about 12.5 percent of all funds disbursed.


Related Articles

arrow_forward_ios
Igal Namdar of Namdar, Arash “Josh” Rahmani and Ebi Khalili of Empire Capital Partners with 345 Seventh Ave (Bernstein Real Estate, Namdar, Empire)
What tenants are paying at 345 Seventh Avenue
What tenants are paying at 345 Seventh Avenue
The Jacx at 28-07 Jackson Avenue and Tishman Speyer’s Rob Speyer (The Jacx, Tishman Speyer)
What tenants pay at Tishman Speyer’s The Jacx in LIC
What tenants pay at Tishman Speyer’s The Jacx in LIC
1450 Broadway and WeWork CEO Sandeep Mathrani (JLL, WeWork)
What WeWork and others pay at 1450 Broadway
What WeWork and others pay at 1450 Broadway
The Domain in Austin with Simon Property Group CEO David Simon (Simon Property)
Here’s what tenants pay (and pull in) at the Domain in Austin
Here’s what tenants pay (and pull in) at the Domain in Austin
The SASB market has produced several massive transactions, like a $4.65 billion loan for the Extended Stay America portfolio or SL Green Realty’s $3 billion refinancing of One Vanderbilt office tower in Manhattan (iStock, KPF, Getty)
CMBS loan issuance is booming — but not in the usual areas
CMBS loan issuance is booming — but not in the usual areas
What tenants pay at Aby Rosen’s 980 Madison Avenue
What tenants pay at Aby Rosen’s 980 Madison Avenue
What tenants pay at Aby Rosen’s 980 Madison Avenue
What tenants pay at Stellar Management’s One Soho Square
What tenants pay at Stellar Management’s One Soho Square
What tenants pay at Stellar Management’s One Soho Square
The Westchester at 125 Westchester Avenue in White Plains and Simon Property Group CEO David Simon
Here’s what tenants pay (and make) at the Westchester mall in White Plains
Here’s what tenants pay (and make) at the Westchester mall in White Plains
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...