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 recreational buildings – a swimming pool, racquetball court, bowling alley and an indoor stadium for hockey or soccer.
Ranking by expense
Most expensive to build – on a dollar-per-square-footage basis – is an enclosed swimming pool.
It’s one-third more expensive to build than either a racquetball court or an indoor stadium.
With respect to the latter two types of structure, there is very little difference in square footage price.
From third place to fourth spot (i.e., a bowling alley) is a relatively small decline (-9%).
Moving from the most expensive type of structure shown in the charts (a swimming pool) to the least expensive (a bowling alley) is a drop of about one-third.
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).
The four types of recreational buildings included in this monthly report are in the mid-range, with an enclosed swimming pool perhaps splashing into the upper-end.
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, Phoenix, New Orleans, Atlanta, 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 16% 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 33% more to build in Chicago than in Atlanta. The inverse of the equation is that it costs 25% less to build in Atlanta than in Chicago.
There is a 28% 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 (+72%).
In a couple of final comparisons, Atlanta and Miami construction costs relative to New York are about one-third cheaper. Houston and Dallas are even more of a bargain.
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 bowling alley to +5.0% for an enclosed swimming pool.
Between those high and low points were an indoor hockey or soccer stadium (+3.6%) and a racquetball court (+3.9%).
By way of comparison, the current rate of inflation in the United States is +2.3%. That was April’s year-over-year increase in the all-items Consumer Price Index (CPI).
The run-up in construction costs, year-over-year is exceeding the change in the overall price level in the country.
From highest to lowest, Winston-Salem, New Orleans, Detroit, Phoenix and Kansas City ranked numbers one through five with respect to year-over-year cost increases among the 25 cities in the latest month.
Pittsburgh, Denver, Dallas, Boston and Houston formed the next rung on the ranking ladder.
Cities with the lowest rates of construction cost increases were Portland (at the bottom of the listing), Minneapolis, San Diego, St. Louis and Los Angeles.
Sixth, seventh and eighth lowest were Chicago, Miami and Washington respectively.
The outlook for construction costs
The latest “Employment Situation” report from the Department of Labor shows the jobless rate in construction falling to 14.5% in April versus 17.8% in the same month of last year.
Year-over-year employment in the sector was +1.1% in the latest month. For the U.S. economy as a whole, it was +1.4%.
The actual level of employment in construction is heading up, but only marginally. It’s still too near the low it reached during the recession.
Employment in architectural and engineering design services – which is a leading indicator for on-site work – has become more robust. Its latest year-over-year percentage change was +2.8%.
Average hourly earnings in construction in April were +1.4%, while average weekly earnings were +3.0%.
Construction labor continues to be a resource that’s being vastly underutilized. And a big reason is a homebuilding sector that’s struggling to recover.
Residential ground-breakings do appear to be gaining more traction, however. In the first four months of this year, they were up 24% (nearly one-quarter) on average versus the same January to April time frame in 2011.
As for non-residential construction starts, they were +18.3% year to date in April according to figures compiled by Reed Construction Data (RCD) and Property & Portfolio Research (PPR).
March to April non-residential starts recorded a particular surge, +64.6%, led by heavy engineering (+190.8%). Non-residential building starts increased a more modest 12.8%.
Demand for construction services will increase in keeping with the improvement in the overall economic cycle. But that’s where the big question mark resides.
The debt problem in Greece has transformed into a political crisis. An election on June 17th will likely determine whether Athens stays with the Euro or reverts back to the drachma.
Until it is clear that the turmoil in Europe has been resolved, there will continue to be a great deal of uncertainty about financial markets, world trade and commodity prices.
|SWIMMING POOL (ENCLOSED)||RACQUETBALL COURT|
|2012||2011||% Change||2012||2011||% Change|
|15||NEW YORK CITY||322.34||306.87||5.0%||236.24||227.19||4.0%|
|BOWLING ALLEY||HOCKEY RINK/INDOOR SOCCER|
|2012||2011||% Change||2012||2011||% Change|
|15||NEW YORK CITY||213.93||207.19||3.3%||234.77||226.59||3.6%|