Currently Reading

Nonres construction could be in for a long recovery period

Market Data

Nonres construction could be in for a long recovery period

Rider Levett Bucknall’s latest cost report singles out unemployment and infrastructure spending as barometers.

By John Caulfield, Senior Editor | January 13, 2021
A quarterly index of construction costs, by national averages

Construction costs rose marginally in the latest quarterly tracked by the consultancy Rider Levett Bucknall. Image credit: RLB

From July through October of 2020, national construction costs rose, on average, by 0.25%, based on 14 markets in North America tracked by the construction consulting firm Rider Levett Bucknall (RLB), which has just released its North America Construction Cost report for the fourth quarter of 2020.

Over the first 10 months of last year, construction spending rose by 3.7% to $1.439 trillion, according to Census Bureau estimates. Construction costs were up by 2.03%. RLB’s National Construction Cost Index stood at 209.82 for the fourth quarter of last year, compared to 205.62 for the same period a year earlier. After rising consistently since the fourth quarter of 2015, RLB’s Index tapered off last year.

The full report can be downloaded from here.

Given the impact of construction activity from the coronavirus pandemic, “the economic damage incurred over the past nine months will take time to heal,” writes Julian Anderson, FRICS, President-North America for RLB.

Anderson expresses concern about lingering unemployment that is “casting a darker shadow over the economy.” He speaks optimistically about President-Elect Joe Biden’s expansive infrastructure plan, whose passage became more likely now that Democrats will control the executive and legislative branches following the election of two Democratic senators in Georgia earlier this month.

For the most part, inflation is under control in the construction sectors of U.S. metros.


Anderson predicts that Biden’s plan will receive bipartisan support “if it is tied to creating jobs that have been lost due to the pandemic.” The New York Times, quoting Bureau of Labor Statistics estimates, reported on January 9 that 9.4 million jobs were lost in the U.S. in 2020, the worst year since World  War II.

Construction unemployment, which spiked in the second quarter when the coronavirus delayed or postponed projects, has recovered of late. The industry gained 51,00 jobs in December, even though the total for the year was down 142,000, or 1.9%. However, a survey that included 1,329 responses, conducted by Associated General Contractors of America (AGC) in every state from Nov. 11 through Dec. 11, found that contractors are generally pessimistic about the outlook for nonresidential and multifamily construction in 2021.


RLB’s report breaks down its Cost Index by cities and building types. For example, San Francisco, New York, and Boston registered the highest indices for prime office construction. Chicago, Honolulu, and San Francisco had the highest cost indices for five-star hotels. Los Angeles is the most expensive market in which to build hospitals, in part because of California’s seismic mitigation requirements.

This chart shows the relative costs of materials and labor as bid in markets around the U.S., and the average percentage change from October 2019 to October 2020.


San Francisco and Los Angeles had the highest indices for the Industrial sector, Sn Francisco and Seattle for multifamily costs, and Honolulu and New York for costs attendant to building high schools.

All told, Chicago, Boston, New York, Portland, and San Francisco all experienced cost increases that were higher than the national average in the latest quarter, even though Chicago’s Cost Index was lower, by 1.29%, for the year. Conversely, Los Angeles experienced the highest October 2019-October 2020 increase in its Cost Index, 4.41%, despite a slight decline in the latest quarter. And for the year, San Francisco had the highest “as bid” index measuring a representative sampling of materials and labor among the markets tracked.

Denver, Seattle, and Washington D.C. saw quarterly increases that were below the national average for construction costs.

Related Stories

Market Data | Sep 22, 2021

Architecture billings continue to increase

The ABI score for August was 55.6, up from July’s score of 54.6.

Market Data | Sep 20, 2021

August construction employment lags pre-pandemic peak in 39 states

The coronavirus delta variant and supply problems hold back recovery.

Market Data | Sep 15, 2021

ABC’s Construction Backlog Indicator plummets in August; Contractor Confidence down

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels all fell modestly in August.

Market Data | Sep 7, 2021

Construction sheds 3,000 jobs in August

Gains are limited to homebuilding as other contractors struggle to fill both craft and salaried positions.

Market Data | Sep 3, 2021

Construction workforce shortages reach pre-pandemic levels

Coronavirus continues to impact projects and disrupt supply chains.

Multifamily Housing | Sep 1, 2021

Top 10 outdoor amenities at multifamily housing developments for 2021

Fire pits, lounge areas, and covered parking are the most common outdoor amenities at multifamily housing developments, according to new research from Multifamily Design+Construction.

Market Data | Sep 1, 2021

Construction spending posts small increase in July

Coronavirus, soaring costs, and supply disruptions threaten to erase further gains.

Market Data | Sep 1, 2021

Bradley Corp. survey finds office workers taking coronavirus precautions

Due to the rise in new strains of the virus, 70% of office workers have implemented a more rigorous handwashing regimen versus 59% of the general population.

Market Data | Aug 31, 2021

Three out of four metro areas add construction jobs from July 2020 to July 2021

COVID, rising costs, and supply chain woes may stall gains.

Market Data | Aug 24, 2021

July construction employment lags pre-pandemic peak in 36 states

Delta variant of coronavirus threatens to hold down further gains.

More In Category

Magazine Subscription

Get our Newsletters

Each day, our editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.


Follow BD+C: