Construction costs could rise another 14% this year

Costs are increasing sharply for construction firms

Construction costs in the US have been predicted to increase by 14.1% by the end of the year, according to real estate giant Coldwell Banker Richard Ellis (CBRE).

The increase has been forecast due to a number of issues, including a lack of workers, general inflation, supply chain problems and ongoing issues around the Covid-19 pandemic and the war in Ukraine.

The rise in costs would be the largest since CBRE began tracking cost projections in 2007. 

“The construction industry thrives on predictability, but we continue to grapple this year with numerous challenges and volatility, making estimating and managing costs more difficult,” said Nicolas McNamara, Director, Cost Consultancy for CBRE.

“Labour shortages and wage pressure – combined with supply chain disruption – have contributed to a sharp increase in costs. But demand for new projects remains strong.”

Construction costs are increasing around the world. In Romania, construction costs more than doubled in February 2022 while in the UK year-on-year prices for all building work rose by 27.2% from May 2021 to May 2022 according to the government. Australia has seen construction costs rise 25% over the last five years – with a 10% rise in the past 12 months, the fastest rate on record.