US construction costs will increase by 14% by end of 2022

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The world’s largest real estate company, Coldwell Banker Richard Ellis (CBRE), has predicted a 14.1% year-on-year increase in US construction costs by the close of 2022, citing financial pressures such as inflation, labour shortages, supply chain challenges, Covid-19 and Russia’s invasion of Ukraine.

It is the largest jump since CBRE began making cost projections in 2007.

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2021 saw a 11.5% rise, which also exceeded the 2-4% increase expected that year.

CBRE predicts that cost inflation will fall to 4.3% in 2023 and 2.9% in 2024, as inflation, as supply chain problems recede.

But it calculates that delays in material deliveries, labour scarcity and semiconductor shortages will endure.

Nicolas McNamara, director of cost consultancy, said: “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.

“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. Understanding the levers moving construction costs, which are analysed in this report, is key to navigating this challenging environment.”

Source: www.globalconstructionreview.com