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Mortenson: Nonresidential construction costs expected to increase in six major metros

The Construction Cost Index, from Mortenson Construction, indicated rises between 3 and 4% on average.

February 04, 2016 |
Non-residential construction costs expected to increase slightly

Construction on the Amazon Complex in Seattle in December 2015. Photo: Jeffrey Scott Will/Creative Commons.

A study of six major metropolitan areas concludes that nonresidential construction costs, on average, will rise between 3% and 4% this year.

The Construction Cost Index report, released quarterly by Mortenson Construction, measures construction costs by pricing representative nonresidential construction projects in Chicago, Milwaukee, Minneapolis-St. Paul, Phoenix, Denver, and Seattle.

"There continues to be a lot of activity in the markets we track, although average project size is reduced relative to recent years," Clark Taylor, VP of Estimating at Mortenson, said in a statement. "Construction employment is leveling out and price escalation should be more consistent with long-term averages. We believe this should allow customers to more accurately plan for increases in the next year."

Highlights of the report include:

• Chicago's cost index increased 4.6% throughout 2015.

• Denver saw double-digit growth in construction employment in 2015, but the rate has plateaued since mid-2014.

• Milwaukee's construction labor market trend fell eight points year-over-year in 2015.

• Construction activity in Minneapolis-St. Paul grew, but at a slower pace than in previous years.

• Phoenix's cost index was 2.8% above year-end 2014.

• Seattle had double-digit employment growth for the third year.

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