New York the Most Expensive for Construction; Minneapolis Moves up the Chart
The first column in the accompanying table ranks the relative cost of construction in 51 major cities in the United States. New York is at the top of the list at 132.6% of the “30-city national average” (i.e., 32.6% above the average). San Francisco (23.2% above) and two other California cite, San José (17.3%) and Oakland (16.5%) are also in the top five, as is Honolulu (20.2% above the average).

For the 20 cities with construction costs above the 30-city national average, there have been a couple of shifts in the latest ranking compared with the previous compilation in October 2007. Minneapolis has moved ahead of Stamford; Sacramento has leap-frogged over Hartford; and Milwaukee has jumped ahead of St. Louis.

Among the bottom ten lowest-construction-cost cities are four cities in Texas – Austin, San Antonio, Dallas and Houston. Major centers in Florida are also relatively low-cost for construction, including Jacksonville, Fort Lauderdale, Miami and Orlando. However, the tightest concentration of low-construction-cost cities might be in Tennessee, with both Memphis and Nashville way down the list, in positions 45 and 46 respectively.

The figures in the accompanying table are based on RSMeans’ construction cost indices for January 2008. 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 was the case in October 2007, Las Vegas (+5.7%) led all cities in terms of the year-over-year increase in construction costs in the latest report. Rounding out the top five were three of the largest population centers in the country – New York (+5.4%), Chicago (+4.9%) and San Francisco (+4.7%), with San José (+4.9%) tagging along as well. San Francisco made the biggest move up the chart, from thirteenth spot last time to fifth position this time.

At the low end of year-over-year construction cost increases were the largest cities in Florida. But Memphis (+2.0%) and Nashville (+2.1%) had the lowest increases of all, along with Houston (also +2.1%).

As for the final column in the table, Minneapolis had the largest quarter-to-quarter increase. Three cities (two of which are in Texas) had slight quarter-to-quarter declines − Toledo, Houston and Dallas (all -0.1%).

Latest CCI Change Remains Below CPI Change
The +3.6% year-over-year increase in RSMeans’ 30-city national average construction cost index (CCI) compares with the +4.3% January increase in the overall price level (i.e., the Consumer Price Index or CPI) for the country. Weak residential markets are helping to keep building costs down across the whole spectrum of construction activity in most parts of the country.

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