Year-over-year Construction Cost Increases Range from 3.8% to 4.9%
According to the accompanying table and charts, a "typical" two- to three-story hospital had the largest year-over-year increase in construction costs in November 2008 (+4.9% on average for 25 major centers) among three type-of-structure categories recently monitored by RSMeans. Next in line came a four- to eight-story hospital (+4.2%), followed by a nursing home (+3.8%). Year-over-year comparisons are not valid for the apartment building category, since there was a major upgrade in the specifications this year compared with last year.

As for the actual dollar-per-square-foot cost of construction, a two- to three-story hospital is the most expensive to build. A four- to eight-story hospital is second-most expensive, with an eight- to 24-story apartment building in third spot. A nursing home is the cheapest to build. The range between the lowest and highest cost structures is significant − a markup of 80%.

New Orleans Leads in Year-over-year Cost Increases
Among the 25 cities shown, New Orleans was the leader for greatest year-over-year percentage increases in construction costs, ranging from a high of +6.8% for a two-to three-story hospital to a low of +5.6% for a nursing home. Denver, Miami, Dallas, Baltimore and San Francisco formed the next tier of largest percentage gains. Rounding out the Top 10 were Atlanta, Washington, Seattle and Houston.

Large cities in the middle of the pack for percentage cost increases were Chicago, Los Angeles, Kansas City, New York, Phoenix, St. Louis and San Diego. Major cities with the lowest year-over-year construction cost rises were Detroit, Boston, Minneapolis, Pittsburgh and Philadelphia.

City Rankings Based on Level of Construction Costs
A ranking of cities based on the dollar-per-square-foot level of construction costs may be quite different than one based on year-over-year percentage change. Therefore, it is well to consider which cities are the most expensive in which to build and which are relatively cheaper.

New York is the costliest city in which to build in the United States, with San Francisco in second place. Boston, Chicago and Philadelphia fill positions three through five. Minneapolis, Los Angeles, San Diego and Seattle are also relatively expensive.

Detroit, St. Louis, Kansas City, Pittsburgh and Denver are in the mid-range for dollar-per-square-foot construction costs. Also among the mid-range cities is the nation's capital, Washington, which lies just slightly below the middle of the pack. Major cities that are relatively low cost are Atlanta, Miami, Phoenix, Houston and Dallas.

It is also informative to provide some regional construction cost comparisons. For example, it costs 27% more to build in Chicago than in Atlanta and there is a similar spread between high-cost Philadelphia and low-cost Miami. Finally, the premium between the highest-cost city, New York, and the lowest-cost city in the table, Winston Salem, is +67%.