The cost of construction materials is up, due to “significant” swings in commodity pricing, and additional increases are expected in the spring, Senior Vice President Larry Graeve and Senior Estimator Amy Burk of The Weitz Company write in a new issue brief for the American Seniors Housing Association.
The cost of lumber has increased 43% over the past 12 months and continues to grow, and the cost of rolled steel — used for making metal studs, track and metal deck — is up 63%, according to the brief, issued Tuesday. Weitz is a full-service construction company, general contractor, design-builder and construction manager.
The per-square-foot cost of construction in winter 2021 in independent living has averaged $173 to $263 per gross square foot, depending on materials and finishes used, according to the brief. Costs in assisted living, meanwhile, have averaged $200 to $316 per gross square foot, and costs in skilled nursing have averaged $230 to $369 per gross square foot.
The calculations, based on an index of 100 cities, include general conditions, insurance, tax, bond and fee but not site construction costs.
Overall, building inflation has increased 4.4% over the past 12 months. Differences by market exist, however. Prices in Los Angeles have decreased –1.6%, for instance, whereas prices in Baltimore have increased 9.5%. Over the next six to 12 months, costs in some cities will remain flat or will decrease slightly, whereas costs in other cities may increase 3% to 5%.
The contractor backlog is down 20% over the past year, according to the brief. A labor shortage, however, is adding time to construction schedules and increasing overall labor costs due to annual hourly increases, overtime pay and labor risk. Tariff issues have calmed for the time being, according to the authors.
Download the full report on the Weitz website.