The 12 most expensive US cities for construction

Construction's recovery from the COVID-19 pandemic will vary greatly by city, but will most likely begin this year, a new report from construction management firm Cumming says.

The company's Q1 construction market analysis predicts that the industry's resurgence will return in earnest starting in the third quarter of this year, and the firm said it is already seeing a significant pick up in activity and discussions related to new and upcoming projects.

The cost of construction is up in the majority of markets that the company tracks, due to the skilled labor shortage and rising material prices, especially for items such as steel and lumber, it noted.

The cost of construction has risen during the pandemic, at about 1 or 2 points below the typical 12-month average, unlike the Great Recession when prices fell dramatically, Daniel Pomfrett, Cumming vice president, told Construction Dive.

The cities covered in the report will bounce back from the pandemic at different rates, he said, and costs to build in each city vary greatly by building sector.

He also noted that previously high-volume sectors such as retail and offices are being replaced by demand for data centers and mission critical facilities. This trend has been especially prevalent in Southern and Midwestern states, where data center construction is increasing at an impressive rate, he said.

Cumming provided Construction Dive with an index showing the most expensive markets in which to build this year, using Washington, D.C., as a baseline. They are:

Some of the findings are not surprising, given that San Francisco and New York City have long dominated construction costs in the U.S. and even the world. Even before the pandemic, the two cities were Nos. 1 and 2 respectively on Turner and Townsend's 2019 International Market Construction Survey.

In each of the cities above, Cumming also tracked cost-per-square-foot information broken down by building sector, including healthcare, education, and public and community facilities. Some of the most expensive types of projects to build in the U.S. this year (not including land costs) are:

An acute care medical facility, which can cost up to $1,468 per square foot in New York City and $1,455 per square foot in Honolulu.
A museum/performing arts building which can cost up to $1,304 in New York City.
A specialty clinic in Honolulu ($1,213)
A five-star hotel, which can cost up to $1,108 in New York City and $1,044 in San Francisco.
A high-rise office building in New York City ($1,026).
A higher-ed lab in New York City ($1,090).

The numbers also highlight the discrepancy in costs between the cities with the highest construction costs and those with the lowest. For instance, these are the highest costs for these types of projects in Raleigh-Durham, N.C.: