Americas Industrial Construction Cost Guide 2024

INDUSTRIAL CONSTRUCTION COST GUIDE 2024

BUILDING COST INCREASES ARE DECELERATING, BUT LABOR COSTS AND INFLATION STILL IMPACT COSTS

Based on the most recent Engineering News Record (ENR) estimates, U.S. construction costs have moderated but remain elevated. Supply chain constraints and inflationary pressures pushed costs higher, resulting in double digit YOY increases in 2022. This pace of increases has decelerated; in March 2024, construction costs grew 2.6% YOY, while building costs edged higher by 3.8%. Both skilled and common labor costs have recently risen at a higher pace than their 10-year averages. U.S. new warehouse construction costs also have leveled out, based on the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for new warehouse construction. Stronger than normal demand for warehouses in 2021 and 2022 resulted in new warehouse construction price increases of 45%, significantly higher than the five-year average of 3.2% for the years 2015 to 2019. Slower demand has decreased the new warehouse construction pipeline, resulting in a leveling out of price increases. As of March 2024, new warehouse construction prices have decreased 1% YOY.

MONTHLY YOY CHANGES

10% 12% 14% 16% 18%

0% 2% 4% 6% 8%

Jul-21

Jul-22

Jul-23

Jan-21

Jul-20

Oct-21

Apr-21

Jan-22

Jan-23

Jan-24

Oct-22

Oct-23

Apr-22

Jan-20

Apr-23

Apr-24

Oct-20

Apr-20

Construction Building Common Labor

Skilled Labor

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

NEWU.S. WAREHOUSE CONSTRUCTION COSTS LEVELING OUT

260

240

U.S. new warehouse

+0.1% MOM -1% YOY

220

construction costs also have leveled out, based on the Bureau of Labor Statistics (BLS) Producer Price Index (PPI) for new warehouse construction.

200

180

160

140 Construction (Dec2004=100)

120

Producer Price Index (PPI) - New Warehouse

Jul-17

Jul-21

Jul-15

Jul-18

Jul-16

Jul-19

Jul-22

Jul-23

Jan-17

Jan-21

Jan-15

Jan-18

Jul-20

Jan-16

Jan-19

Jan-22

Jan-23

Jan-24

Jan-20

Source: Moody’s, Bureau of Labor Statistics, Dodge Data & Analytics

5