Accompanying this report are tables and graphs based on RSMeans’ measures of dollar-per-square-foot construction costs.
This month’s results are for four types of college structures – a dormitory, laboratory, classroom and student union building.
Ranking by expense
Most expensive to build – on a dollar-per-square-footage basis – is a “typical” college dormitory.
Second spot, with only a narrow gap, goes to a college laboratory. Third position is taken by a classroom.
From there, it’s a slightly steeper descent to a student union building.
Moving from the most expensive type of structure shown in the charts (a dormitory) to the least expensive (a student union building) is a drop of about one-fifth (-18%).
Comparisons with other types of structure
According to RSMeans, the cheapest types of structure to build, after extremely low-cost parking garages, are factories and warehouses.
A convenience store also belongs in this low-expense grouping.
Department stores and movie theatres are a little pricier.
In the mid-range for construction costs are nursing homes, office buildings, hotels and high-rise apartment buildings.
In the latter three categories, heights above ten stories tend to lower the dollar-per-square-footage cost.
Also in the mid-range for construction costs are elementary and secondary schools, along with institutions of higher learning (i.e., college buildings).
By far the most expensive types of structure to build are hospitals, jails/prisons, courthouses and police stations.
Some of the foregoing institutional building categories exceed $350 per square foot in the largest urban centers.
In New York, for example, the cost of a low-rise hospital exceeds $400 per square foot.
New York is the most expensive; cities in the South are least expensive
New York has the highest dollar-per-square-foot construction costs in the country.
San Francisco, Boston, Chicago and Philadelphia hold the other four positions in the Top Five among major U.S. urban centers.
Relatively low-cost cities are mainly in the southeast and south-central. Included are Miami, Atlanta, Phoenix, New Orleans, Houston, Dallas and Winston-Salem.
Kansas City, Detroit, San Diego, St. Louis, Pittsburgh, Portland and Cleveland are situated in the middle among the 25 cities set out in the tables.
Washington, Denver and Baltimore are in the low mid-range.
Minneapolis is the nation’s sixth most expensive construction-cost city. Los Angeles and Seattle on the west coast are in the upper mid-range.
Along the Pacific shoreline, dollar-per-square foot construction costs in Los Angeles, Seattle and San Diego are between 13% and 17% lower than in high-cost San Francisco.
Portland is nearly one-fifth (-19%) less expensive than the City by the Bay for building projects.
Some other city comparisons
In some other city comparisons, it costs 32% more to build in Chicago than in Atlanta and there is a 27% differential between higher-cost Philadelphia and lower-cost Miami.
The mark-up in New York, the most expensive city among the 25 shown, and Winston-Salem N.C., the least expensive, is nearly three-quarters (+74%).
Year over year construction costs
The year-over-year average percentage changes for the 25 cities shown in the tables and graphs ranged from +3.2% for a laboratory to +5.2% for a classroom.
Between those high and low points were a student union building (+3.4%) and a dormitory (+5.0%).
By way of comparison, the current rate of inflation in the United States is +2.7%. That was March’s year-over-year increase in the all-items Consumer Price Index (CPI).
The run-up in construction costs, year-over-year is slightly exceeding the change in the overall price level in the country.
From highest to lowest, New Orleans, Kansas City, San Francisco, Detroit and Denver ranked numbers one through five with respect to year-over-year cost increases among the 25 cities in the latest month.
Pittsburgh, Phoenix, Atlanta, Washington D.C. and Winston-Salem formed the next rung on the ranking ladder.
Cities with the lowest rates of construction cost increases were Boston, Chicago, San Diego, Minneapolis, Philadelphia and Portland.
The outlook for construction costs
For much of the past decade, the prognosis for construction costs has depended on emerging nations and their plans for infrastructure construction.
Another factor has been increasing demand for consumer goods from the burgeoning middle classes in those countries. For example, cars and appliances are made from steel and other metals and minerals.
The upshot has been generally rising commodity prices.
At this time, however, growth expectations for such nations as China, India and Russia have been lowered for 2012 relative to 2011. (See the International Monetary Fund’s World Economic Outlook.)
The export-oriented developing economies will be held back by Europe, where sovereign debt issues are still plaguing many of the Euro-zone nations.
Therefore, the U.S. is setting the pace for the global economy. Consequently, many material prices will be set by conditions in the domestic construction marketplace.
For example, lumber and gypsum producers will find it difficult to sustain price rises until U.S. home starts pick up on a consistent basis.
Higher fuel costs are entering the country as a result of the turmoil in world oil markets.
But for building products where natural gas is a feedstock, the bias will be towards moderation.
The opening up of new reserves in shale rock is keeping the price of natural gas historically low.
Demand for building products will increase in a normal cyclical fashion in non-residential building markets.
But the civil/engineering category of work will be less buoyant than in other recoveries due to government decision makers becoming “converts” to spending restraint.
The recent history has been for material prices (+5.0% to +6.0%) to increase year-over-year faster than on-site labor charges (+2.0% to +3.0%).
The differential is likely to diminish in the months ahead, with both series settling down to percentage changes that are closer to the performance of the Consumer Price Index.
|college laboratory||college classroom|
|2012||2011||% Change||2012||2011||% Change|
|15||NEW YORK CITY||258.12||249.87||3.3%||245.36||233.08||5.3%|
|college dormitory||College student union building|
|2012||2011||% Change||2012||2011||% Change|
|15||NEW YORK CITY||268.04||255.09||5.1%||219.39||212.07||3.4%|