Mortenson Construction released its quarterly Construction Cost Index report, Friday, for Phoenix along with five other metropolitan areas in the U.S.
According to the report, after experiencing a dip in late 2014, the Phoenix construction market rebounded in 2015. The report also cites that local, non-residential construction employment continued to show positive growth in 2015, according to data from the Bureau of Labor Statistics.
Costs for non-residential construction labor, material and equipment costs in Phoenix has continued to grow over the past two quarters, but at a rate about two points below the national average. The Phoenix index is now 2.8 percentage points above where it was at this time a year ago.
Construction employment trends point to a market that is gaining traction. Looking ahead, costs are forecasted to increase 3 percent in 2016.
“While construction continues to rebound at a modest and controlled pace, all indications are that skilled labor will be our next pinch point in the Arizona market,” said Robert Nartonis, senior vice president, Mortenson. “This demand will lead to a modest rise in construction cost. However, focus should be on quality control as untrained or under trained labor may start to fill the gaps in some trades.”
Prices of building materials and components in Phoenix that experienced the highest cost increase in the fourth quarter (vs. Q3 2015) included: Finish Carpentry, Wood Doors, Steel Doors/Frames, Traction Elevators and Entrances/Storefronts. The majority of other categories experienced flat costs, while Reinforcing Steel declined significantly.
Mortenson tracks and reports on six metropolitan areas in the U.S. including Chicago, Denver, Minneapolis, Milwaukee, Phoenix and Seattle. The Mortenson Construction Cost Index is calculated quarterly by pricing representative non-residential construction projects in various metropolitan areas. It is part of a portfolio of industry insights and market studies provided by Mortenson. The Construction Cost Index is available for download at http://www.mortenson.com/cost-index.