Tuesday, March 31, 2009

Turner: Construction Costs Continue Falling

U.S. commercial building construction costs have fallen a projected 5.77% in first-quarter 2009 compared with the previous three months, according to an index compiled by Turner Construction Co.

The New York City-based construction company index for the first three months of 2009 is 866, down from 866 in fourth-quarter 2009 and down 2.59% from the same period a year ago.

Construction costs have come down as construction spending has decreased and competition in the industry has increased -- even as activity in the education, healthcare, public and green investment sectors continue to show strength amid optimism about the $787 billion federal stimulus legislation, said Turner Vice President Karl F. Almstead, who oversees the Turner Building Cost Index.

Turner’s index is calculated based on several national metrics, including labor rates and productivity, material prices and market competition.

In the last six months of 2008, commodity and material prices fell from their recent highs and are now stabilizing as a result of production cutbacks and inventory reductions.

Turner, one of the nation’s largest commercial builders, has prepared the construction cost forecast used widely by the construction industry and federal and state governments for 80 years.