Life Sciences U.S. Fit-Out Cost Guide 2023

CONSTRUCTION COSTS GROWTH RETURNING TO LONG-TERM AVERAGES

COSTS ARE MODERATING BUT REMAIN ELEVATED

Construction costs faced significant upward pressure in 2021 and 2022 due to a combination of supply chain constraints, inflation and interest rate hikes. Pricing decelerated steadily through the first six months of 2023 and as of July 2023, monthly annual increases for both construction and building cost indices have fallen below their 10-year averages. As of July 2023, the Engineering News Record (ENR) construction cost index rose 2% YoY, and the building cost index rose 2.6% YoY. Both were significantly below their 10-year averages of 3.4% and 4.4%, respectively. Despite easing commodity prices, the labor component of construction costs continues to apply upward pressure to overall pricing. As of July 2023, the common labor cost index rose 2.1% YoY, significantly higher than 2022 levels but right at the 10-year average. Skilled labor costs have risen more strongly. As of July 2023, the skilled labor cost index was 4.5% higher YoY, nearly double its 10-year average of 2.4%.

MONTHLY YOY CHANGES

10% 12% 14% 16% 18%

0% 2% 4% 6% 8%

Construction Building Common Labor Skilled Labor

Source: Engineering News Record (ENR) (McGraw-Hill)

6

Cushman & Wakefield