According to the RLB Comparative Costs Index report, the boomtime residential market has driven up 2020 construction costs despite the pandemic slowdown in the first half of the year.
The RLB report, named after the consulting firm Rider Levett Bucknall, cited cost increases across the board in the twelve major cities, with the only outlier being Chicago, which saw a 1.9% decline. The report tracks the costs of labor, materials, contractor and subcontractor overhead and fees, and taxes.
Los Angeles (at 4.41%), San Francisco (at 3.82%), and New York City (at 3.67%) held the largest increases in construction costs.
With many essential projects underway at the start of 2020, authorities largely allowed construction to continue without the same lockdown conditions experienced in many other industries.
“After many bumps and bruises, construction has proven to be one of the better-performing sectors of the economy over a difficult period,” said Bernard M. Markstein, president and chief economist of Markstein Advisors, in an Associated Builders and Contractors press release last year.
However, despite the good news of higher-than-expected earnings in 2020, the RLB report warns of a slowing economy, projecting a level-off for the first half of 2021. The future remains unclear beyond 2021.
But according to Julian Anderson, RLB’s president, there is reason for hope. Anderson stated in a press release: “I’m optimistic that we could see a dramatic comeback for the AEC [architecture, engineering, and construction] industries.”
With construction costs on the rise and no foreseeable slowdown of demand for residential building, 2021 offers growing opportunities for builders.