Honolulu’s construction costs skyrocketed by more than 13 percent in 2014, the highest percentage in the United States and more than double the national average, according to a new report.
The Rider Levett Bucknall first quarter 2015 construction cost report for the U.S. noted that costs continue to rise because the industry is smaller than it was prior to the start of the Great Recession.
As construction activity picks up, this smaller-sized industry is, in some areas of the country, struggling to keep up with demand.
Although the actual costs of labor and material continue to increase slowly, the gap between demand and supply leads to upward pressure on bid prices as increasing construction activity chases static resource availability, the report said.
The national construction cost index shows that costs have gone up by about 21 points from 2010 to today.
In 2014, the national average increase in construction costs was about 5.5 percent.
Honolulu had the highest increase in percentage at 13.3 percent, while Boston, Chicago, Denver, Los Angeles, New York, Portland, San Francisco, Seattle and Washington D.C. experienced more modest annual increases of between 4.1 percent and 6.1 percent.
The value of construction in 2014 in the U.S. was $961.4 billion, up 5.6 percent when compared to the previous year, the report said.
Honolulu also is among the top cities in the country when it comes to the number of construction cranes up and running in the city, due mainly in large part to the much publicized uptick in residential activity in the Kakaako neighborhood.
Tower crane counts dotting Honolulu’s skyline increased to 16 at the most recent count in November from 13 in August, according to the inaugural edition of Rider Levett Bucknall’s North American Crane Index.
Residential projects account for 53 percent of the tower cranes in Honolulu, with large commercial projects representing 33 percent of the total cranes, the report said.
Courtesy of Pacific Business News