New York Still the Most Expensive for Construction; San José Moves Ahead of Oakland
The first column in the accompanying table ranks the relative cost of construction in fifty-one major cities in the United States. New York still heads the list. Rounding out the top five are Honolulu and three urban centers in the Bay area of California — San Francisco, San José and Oakland.

For the 25 cities with construction costs above the 30-city national average, there has been only one shift in position in the latest ranking compared with the previous ranking compiled for July 2007. San José has moved ahead of Oakland.

The figures in the accompanying table are based on RSMeans’ construction cost indices for October 2007. For estimating purposes across a range of construction markets, RSMeans employs a composite model of nine building types: a factory, office building, retail store, town hall, high school, hospital, parking garage, apartment building and hotel/motel. The result is mainly reflective of non-residential building construction costs, but does include a residential component as well. The index values are published quarterly.

Las Vegas Leads Year-over-year Change
As for the year-over-year percent changes in index values, Las Vegas (+5.6%) has moved up the list from seventh position in July to number one in October. San José (+4.9%) also made a big jump from fourteenth in July to third in October. Rounding out the top five in terms of year-over-year increases are three of the four largest cities in the country according to population — New York (+5.2%), Chicago (+4.9%) and Washington (+4.7%). (Los Angeles is in eleventh spot at +4.1%.)

The preponderance of the largest urban centers is a return to a more normal pattern of construction cost increases and also reflects a more active role being played by non-residential building in the market mix. Four cities in Florida that were particularly strong in residential construction earlier in the cycle have made dramatic moves, from among the top five in July to among the lowest five in October.

As for quarter-to-quarter increases, New York leads again and other Atlantic coast cities are dominant among the top 10, including Providence, Washington, Baltimore, Norfolk and Charlotte. These are cities with strong local economies geared towards new growth industries and/or knowledge-based industries.

Latest CCI Change is Below CPI Change
The +3.4% year-over-year increase in RSMeans’ 30-city national average construction cost index (CCI) compares with the +4.3% November increase in the overall price level (i.e., the Consumer Price Index or CPI) for the country.

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