According to RSMeans’ Construction Cost Index (CCI), which is based on an average of 30 major American cities, the expense of building in January 2011 increased 2.3% versus January 2010. The composite index gain was comprised of materials at +1.8% and labor at +2.9%.
Reed Construction Data Chief Economist Alex Carrick says, “recent evidence suggests the materials side of building costs is heating up”. The latest quarter-to-quarter gain in the overall index, October 2010 to January 2011, was +3.7% annualized. In Charlotte, materials prices speeded up considerably to +4.6% quarter to quarter annualized.
With respect to material inputs, some of the largest year-over-year cost changes came in concrete reinforcing (+10.9%), metal joists and decking (+5.5%) and tile and terrazzo (+6.4%).
Emphasis shifted in the latest quarter-to-quarter changes. Site and infrastructure preparation and demolition was +8.4% annualized; structural metal framing, +4.8%; metal joists and decking, +5.0%; glazing and curtain wall +3.9%; and fire protection, plumbing and HVAC +19.7%.
Higher prices for metals (e.g., copper at a record) are working their way downstream. Most important – due to oil’s usage in so many stages of the construction process – has been the jump in the world price of crude with the addition of a $10 to $15 USD per barrel risk premium.
For materials not as vulnerable to geopolitical conflict or separated from the emerging nations’ effect, change has been either more moderate or in the opposite direction. For example, quarter-to-quarter concrete forming prices in the latest period were -9.3% annualized; precast concrete, -9.7%; plaster and gypsum board, -14.7%; and ceilings and acoustic treatment, -4.9%.
In the U.S., the cities with the highest construction costs relative to the country as a whole are mainly the biggest centers, including most-expensive New York, followed by San Francisco, Oakland, Boston and Chicago. RSMeans ranked Charlotte as havng the lowest construction costs for the 51 cities studied — 76.8% of the national average. Read More.