The construction industry is going through a bit of a boom. With the housing market crash well behind us, and the economic recession nowhere near as bad as it was all those years ago, construction has taken off. Unfortunately, the boom also comes with an unintended side-effect: rising costs. The industry as a whole saw an increase in costs, with an average of about 4 percent.
Large Metropolitan cities, such as New York and Chicago, have definitely felt the price increase, with New York receiving a 4 percent jump according to a report from The Real Deal. Keep in mind that this number is slightly lower than New York’s typical average of 5 percent, but a rise nonetheless.
Chicago is also dealing with the average 4 percent rise in construction costs. An article from Bisnow states that the city has seen a major rise in construction, with a record number of construction cranes dominating the city’s skyline. The number is so impressive that Chicago Mayor, Rahm Emanuel even visited the installation of the 33rd construction crane. According to the report, costs in the Windy City grew 1.3 percent from Q3 to Q4. And costs in the Twin Cities have seen similar rises in costs, although, not as high as the former two cities. According to Finance & Commerce, Minneapolis-St.Paul saw a 2.7 percent rise in costs in 2016.
Both Bisnow and Finance & Commerce pulled their data from the same source: Mortenson Construction’s Index. The Index, created in 2009, tracks the construction trends and behaviors of several major metropolitan areas in the country.
In each of the reports, one thing has remained consistent: the lack of labor.
According to the Real Deal report, New York’s Building Congress President, Carlo Scissura, cited the cause for the rise as the lack of workers and more overtime. The staggering lack of labor in the construction industry has also proven to be a popular topic, which I have also touched on in another article of mine.
The construction industry is in a strange position at the moment. Having bounced back from the housing market crash almost a decade ago, buildings are popping up in spades. And even with this success, costs are rising, and there is an alarming lack of construction workers. It is almost surreal to see construction in the state it is in now. Hopefully, costs will lower, and the number of workers will continue to grow.