The cost of construction has come down as construction spending has decreased and competition in the industry has increased; however, construction activity in the education, healthcare and public sectors continue to show strength.
General builder Turner Construction Co. announced a decrease in the Turner Building Cost Index, which projects domestic commercial building construction costs. The first-quarter 2009 index number is down by 5.77 percent from the fourth-quarter 2008 number. Since the first quarter of 2008, construction costs have decreased by 2.59 percent.
“The cost of construction has come down as construction spending has decreased and competition in the industry has increased,” saidKarl F. Almstead, the Turner vice president responsible for the cost index. “However, construction activity in the education, healthcare and public sectors continue to show strength, and increased investment in green buildings across all segments are sources of optimism as potential beneficiaries of the economic stimulus legislation.
“In the second half of 2008, commodity and material prices fell from their recent highs. Material prices are now stabilizing as a result of production cutbacks and inventory reductions. Labor costs are countering the downward cost trend with labor wage settlement increases in 2008, reflecting the demand prior to the market contraction in the second half of the year.”
The building costs and price trends tracked by the Turner Building Cost Index may or may not reflect regional conditions in any quarter. The index is determined by several factors on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace.