Jacob Been, AIA, LEED AP BD+C

The new year is here and although construction costs are still very competitive, we’re starting to see costs rising as the economy slowly improves, even if projects are sporadic here in Illinois. The price of gasoline has fallen 40% or more since late last year, but diesel fuel hasn’t followed the same trend, and diesel is a big factor in transportation costs for the construction industry. A few sources, including Rider Levett Bucknall, an international property and construction consulting firm, reports building costs rising at the fastest pace in more than six years (here). Despite this reality, real estate is still reasonably priced and interest rates remain near historical lows. Those with foresight are taking advantage of these market conditions before today’s costs are a vestige of the past.

Remember the good old days when a new elementary school could be built for less than $500,000? Well, neither do I; it’s a bit before my time, but Healy | Bender had plenty of them back in the 1950’s and well into the 1960’s. In fact, the cost of a new elementary school in the southwest suburbs averaged just $12/sf in 1960. More recent projects such as William E. Young School in Homer Glen (2008) and Parkside School in Peru (2009), at the time, averaged just under $160/sf. Today, in 2015, the average cost is closer to $192/sf with certain projects trending even higher. This month, we’re finalizing bid documents for two school projects in Lake Crystal, Minnesota. During design, Krause Anderson (KA), the Construction Manager, advised of costs that have risen significantly since the school district’s successful bond referendum in August 2014. Construction costs have increased nearly 10% in that region over the past six to eight months. Together with the Owner and Construction Manager, we’ve had to make several difficult plan decisions to provide a greater likelihood of favorable costs on bid day.

Everywhere you look, cost movement is upward. Even so, Dodge Data & Analytics released it’s 2015 Dodge Construction Outlook (here). Dodge’s outlook predicts that U.S. construction starts this year will rise 9% to $612 billion. The weather outside is still cold as ever, but competition for good contractors and efficient, modern buildings designed to meet tight budgets is heating up. Don’t get left behind! We specialize in analyzing your facility needs and we’ve prepared competitive bid documents to meet stringent budgets like those $12/sf budgets back in the 1960’s. The same goes today. The cost of construction will likely never be less. Why wait?  

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