North America Industrial Construction Cost Guide 2023

C U S H M A N & WA K E F I E L D

KEY TAKEAWAY Despite slower rate of cost contractor sentiment survey 1 , GCs generally expect costs to continue to increase in the next six months. 65% of GCs expect their costs to increase slightly (63%) to significantly (6%), while 76% expect their supplier prices to increase slightly (63%) to significantly (13%). This sentiment is more optimistic than a year ago when 96% of GCs expected their supplier prices to increase slightly (64%) to significantly (32%). escalation, according to the Cushman & Wakefield

Building Costs Moderate: Easing in materials pricing has led to slower increases of building costs. The annual change in the ENR building cost index was still elevated at 11.4% in 2022 Q3, though down from 15.4% the previous quarter. Building costs are forecast to ease next year and level out in the longer term. However, an influx of capital from the federal Infrastructure Investment and Jobs Act, the CHIPS Act and the Inflation Reduction Act will fuel continued construction growth in the near term, potentially delaying a return to pre-pandemic pricing. • A component of the ENR building cost index is skilled labor, which includes union wages plus fringe benefits for carpenters, bricklayers and iron workers. Skilled labor costs grew 3.5% YoY, their largest annual increase in 10 years, illustrating labor constraints and inflationary impact on wages. • Another important consideration in the coming quarters will be construction financing. In the current climate, it has become increasingly difficult to finance new projects. While this won’t necessarily impact projects already underway, it could have a dampening impact on the longer-term pipeline.

1 During the fall of 2022, Cushman & Wakefield surveyed over 50 general contractors across North America focusing on industrial projects. The survey gauged their sentiment on topics related to costs, labor and material lead times, among others.

CONTRACTORS AND SUPPLIERS ANTICIPATE RISING PRICES Cushman & Wakefield Construction Contractor Sentiment Survey, December 2022

Decreased Slightly Increased Slightly

No Change

Increased Significantly

100%

6%

13%

16%

80%

44%

63%

60%

63%

63%

40%

41%

20%

25%

19%

16%

13%

6%

6%

0%

General Contractors

GC's Subs & Suppliers

General Contractors

GC's Subs & Suppliers

Past 6 Months

Next 6 Months

2 https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/deloitte-2019 millennialsurvey.pdf

Source: Cushman & Wakefield Research

4 NORTH AMERICA INDUSTRIAL CONSTRUCTION COST GUIDE 2023

Made with FlippingBook - Online Brochure Maker