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

CONSTRUCTION LABOR CONSTRAINTS CONTINUE TO PUSH UP WAGES

Labor costs have steadily increased due to persistent shortages in the construction sector. Even before the pandemic impacted labor markets, there was widespread concern about how a wave of retirements and declining interest in the sector would impact construction projects. Most employment sectors quickly recovered the jobs lost during the onset of the pandemic—even adding more jobs post-pandemic. However, nonresidential construction employment did not recover and instead, faced labor deficits. Of the more than 47,000 nonresidential construction jobs lost due to the pandemic in 2020 through 2021, 37,000 were recovered as of year-end 2022, leaving a 10,000-job deficit from pre-pandemic levels. Revised forecasts indicate that if hiring holds strong through year-end 2023, the sector will be able to clear that 10,000-job deficit by year-end. However, additional loss of labor to the sector in coming years may continue to apply upward pressure to costs.

months of 2023. However, the residential sector experienced a loss of over 11,000 jobs as residential construction ebbed, while the non-building residential sector added nearly 17,000 jobs over the same period. During the eight quarters preceding the pandemic, job openings were largely outpacing quit rates. The pandemic accelerated this trend, and the openings-to-quits rate gap was at its widest during the fourth quarter of 2022 at 310 basis points (bps). That gap closed slightly as of the second quarter of 2023 at 220 bps as the job openings rate receded slightly and the quits rate increased. To attract talent to open positions, the construction sector has raised wages consistently and significantly over the last two years. Based on July 2023 BLS data, construction average hourly earnings grew 5.8% on a YoY basis, more than double the overall construction employment growth of 2.5% YoY. Moreover, the trailing 12-month moving average for median wage growth shows that wages are elevated across

Based on recent U.S. Bureau of Labor Statistics (BLS) data, the overall construction sector added over 86,000 new jobs in the first seven

U.S. CONSTRUCTION JOB OPENINGS AND QUIT RATES LABOR CONSTRAINTS CONTINUE TO IMPACT THE U.S. CONSTRUCTION SECTOR

6%

5%

4%

Gap at its widest

3%

2%

1%

0%

Job Openings Rate

Quits Rate

Source: U.S. Bureau of Labor Statistics (BLS)

8

Cushman & Wakefield