Dive Brief:
- Developers of the Seattle Center Arena (formerly the KeyArena) told members of the press last week that the costs of the overhaul had risen by $50 million to $900 million and that completion had been pushed another few months to at least June 2021, KOMO News reported. The project in September 2017 was estimated to cost $660 million.
- Tod Leiweke, CEO of Seattle Hockey Partners, which owns the city's NHL franchise, said project developer Oak View Group did not value engineer the project or scrimp on its design in any way, and that the extra costs would be worth the end result. General contractor Mortenson, which took over from a joint venture of Skanska USA and AECOM Hunt, is building an expansive arena underneath the historic KeyArena roof.
- Leiweke told the press that the arena would be ready for the start of the Seattle Storm WNBA season in June, as well as a hockey draft that will usher in the 2021-2022 season for the city’s new expansion team.
Dive Insight:
Rising construction costs have also likely contributed to the swollen budget, but that’s something that other long-term construction projects in Seattle and elsewhere have had to deal with as well.
Earlier this month, Turner & Townsend, a global consultancy, released its "2019 International Construction Market Survey,” which determined that U.S.-imposed tariffs have added 5%-10% to the cost of structural steel construction, on top of rising labor and other material costs. In the most expensive place in the world to build, San Francisco, some categories of steel products have risen by as much as 30%.
In Seattle, the third most expensive place to build in North America behind San Francisco and New York City, the average cost of construction was $338 per square foot in 2018, representing an average increase of 5% in construction costs. Turner & Townsend said that Seattle contractors were able to maintain about a 4% margin in this environment. Last year, Seattle contractors paid about $119 per square foot of construction for a site supervisor and $95 for a skilled tradesman like a plumber or electrician. The firm also predicted that Seattle construction costs would rise another 6% in 2019.
But the Seattle Center Arena's escalating costs are Oak View’s problem, as the group’s deal with the city puts the burden of cost overruns on the developer. Oak View must also contribute $40 million toward improving area transportation and $20 million to a community fund. Oak View will operate the arena under a 39-year lease from the city.
