91ÊÓƵ

Construction costs for Portland show a modest increase of 0.72 percent for the second quarter of 2024, Mortenson reported.

The overall outlook for nonresidential construction is cautiously optimistic, according to the report, as industry indices and forward-looking indicators show signs of more robust market conditions ahead. While availability of skilled labor remains a challenge across many markets, stabilization in material prices and availability, coupled with the prospect of interest rate cuts, is boosting confidence in near-term project starts.

Nationally, nonresidential construction costs tracked by the Mortenson Quarterly Cost Index increased by 1.24 percent in the second quarter of 2024 (a 1.85 percent increase year over year), the report states. That followed an increase of 0.34 percent in the first quarter.

All Mortenson regional offices surveyed reported cost increases in the second quarter, including Portland, Seattle (1.08 percent), Denver (0.99 percent), Phoenix (0.76 percent), Chicago (0.83 percent), Minneapolis (2.46 percent), and Milwaukee (2.15 percent).

Over the past 12 months, overall material costs have decreased by 0.9 percent, continuing a stabilization trend as global supply chains become more reliable for most products and materials. For the second quarter, the top three material packages seeing price decreases were structural steel and metal decking (3.1 percent), reinforcing steel material (3 percent), and floor and wall tile (2.2 percent).

Across all markets, volatility in prices has been mostly limited to MEP (mechanical, electrical, and plumbing) scopes dependent on wiring, conduit, and piping. On a trade-by-trade basis, plumbing contractors reported the highest spike (6.1 percent increase) in second-quarter material costs.

Trade partner work increased by 1.8 percent during the quarter, while construction materials increased by only 0.2 percent and labor increased by 4.2 percent, Mortenson reported. Labor costs have increased an average of 5.3 percent over the past 12 months, contributing in part to a similar year-over-year cost increase of 3.7 percent for trade partner work.

According to U.S. Bureau of Labor Statistics data, nonresidential building construction employment in the Portland-metro region totaled 8,100 in June 2024. That was a 4 percent decline (300 workers) from June 2023.

After several megaprojects in the energy sector pushed the value of construction starts up 10 percent in May, total starts fell back 19 percent in June, to a seasonally adjusted annual rate of $1 trillion, according to the Dodge Construction Network. Beyond commercial construction, single-family residential starts remain robust and are an indicator of future demand across all construction sectors, Mortenson reported.