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Top 3 Cities with the Greatest Increase in Construction Costs

by Chris Lee | January 7th, 2016
In cities around the United States, construction costs are rising and causing increased strife for the construction industry. Since the beginning of the last recession in 2008, the construction industry has decreased in size yet the cost of materials and labor has gone up. This has placed an increasing demand for subcontractors and led to a lack of competitive bidding on construction projects in growing cities. However, according to the 2015 Construction Cost Report by construction consultants Rider Levett Bucknall, there are three cities with a marked increase in construction costs.


Honolulu, Hawaii stands leaps and bounds above other U.S. cities when it comes to the greatest increase of construction costs at a 13.30% change since 2014. The increase in construction costs in Honolulu can be accredited to, in no small part, its location. The city is finally starting to recover from the devastation that the recession wrought on the state's construction industry with an increase of residential and hotel construction; however, the extra cost accrued by shipping material to Hawaii has caused Hawaii's largest city to top the list in increased construction costs.

San Francisco

Coming in at a distant second place to Honolulu is San Francisco, California with a 6.10% increase in construction costs since 2014. While union wages and the cost of materials in the Bay Area have remained steady, the marked increase in construction costs in San Francisco can be attributed to the small handful of subcontractors in the city. Subcontractors noticed the lack of competition in the city and bid high or elected to not bid at all, causing the costs of simple projects to rise dramatically.


Falling just below San Francisco, Portland, Oregon comes in third with a 6.02% growth in construction costs. However, unlike San Francisco and Honolulu, Portland is suffering due to their increased economic growth. As retail occupancy rates climb and the boom in apartment construction continues, the city has found itself suffering from a lack of labor in the area as well as having to deal with the nationwide rise in construction materials. These three cities are just the tip of the iceberg when it comes to rising construction costs. All U.S. cities have experienced a marked rise in costs across the board which has force construction companies that don't want to get crushed under rising costs to carefully monitor their spending on labor and materials. However, thankfully there are cost books available such as RSMeans that helps construction companies carefully track costs while providing accurate data on construction costs for over 900 U.S. cities.
Chris Lee
Chris Lee has an extensive background in preconstruction management as a former specialty contractor and business owner. As the Chief Estimator at Esticom, he’s helped thousands of specialty contractors digitize their preconstruction process to increase revenue and profitability while decreasing unnecessary overhead.

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