PHOENIX, ARIZ. — The 2023 Q4 cost report from Rider Levett Bucknall (RLB) highlights significant growth in Ontario’s ICI sector but continued uncertainty across North America.
With current data from mid-Q4 2023, the report shows the U.S. national average increase in construction costs was 1.32 per cent over the previous quarter, with Boston, Chicago, Honolulu, Portland, Seattle and Washington D.C. experiencing increases over the national average this quarter. Denver, Las Vegas, Los Angeles, New York, Phoenix and San Francisco experienced gains that were less than the national average.
The report focuses mainly on the U.S.
It found the U.S. quarterly national average increase in construction cost is approximately 5.28 per cent year-over-year. The U.S. construction unemployment rate is up slightly to 3.8 per cent from 3.4 per cent in the same time period last year.
The Architectural Billings Index (ABI), meanwhile, is 44.3, the third month in a row of significant decreases.
“While there are a lot of positive indicators for the industry right now, including consumer confidence, moderating inflation and low unemployment, there are still enough other indicators showing us that the economic uncertainty hasn’t become any clearer,” stated Paul Brussow, president of RLB North America, in a statement. “The newest numbers on the ABI, the chronic workforce challenge and potential soft recession still feed the uncertainty and a potential slowdown for 2024.”
Brussow wrote one bright spot is that the overall construction industry has remained resilient despite the challenges. Put-in-place construction is up 0.6 per cent, with infrastructure projects leading that growth, while commercial construction declined 1.5 per cent, and multifamily housing has come down from record highs.
“Interest rates and financing constraints have slowed construction starts over the last quarter. We’ll want to keep an eye on interest rates as we start 2024 and the potential for continued slowing of construction starts,” added Brussow.
In Ontario, the value of institutional permits increased from $1.7 billion to $3.1 billion in Q3 2023. The total amount of ICI permits issued as of the end of Q3 reached $15.2 billion, a 26 per cent increase over the same period in the previous year.
It is anticipated that ICI’s total building investment will rise by 22 per cent by 2027 in Ontario. The provincial government is committed to funding $184 billion for infrastructure over the next 10 years, including major transportation projects in several of the province’s biggest cities.
Additionally, the Canadian government has announced a $1.2 billion federal investment in seven new Toronto projects to build 2,644 rental homes through the Rental Construction Financing Initiative.
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