Construction Cost Index
(JANUARY 2009 = 100)
Both our Minneapolis and national cost index have been essentially flat through the first half of 2020. Compared to this time last year, costs have increased less than 1 percent in Minneapolis and 1.5 percent nationally. Our Minneapolis index is 8 points below our national index.
(an indicator of future wage and activity trends)
Commercial construction employment in Minneapolis contracted sharply in the first half of 2020 as a result of COVID-19, but the latest BLS statistics indicate that residential construction employment has not yet been impacted. We expect construction employment will stabilize in the last half of the year.
Building Component Trends
(Q2 2020 vs. Q1 2020)
• Earthwork (5.1%)
• Cast-In-Place Concrete (4.2%)
• Steel Doors & Frames (4.2%)
• Unit Masonry (3.1%)
• Finish Carpentry & Millwork (2.7%)
• Site Concrete (2.4%)
• Acoustical Ceilings (1.9%)
• HVAC Systems (1.9%)
• Wood Doors (1.8%)
• Entrances & Storefronts (1.4%)
• Plumbing Systems (1.3%)
• Electrical Systems
• Fire Protection Systems
• Gypsum Board Systems
• Structural Steel & Metal Decking
• Electric Traction Elevators
• Steel Framing & Stair Erection
• Roofing System
• Deck Formwork
• Flooring & Carpeting (-9.9%)
• Painting & Wall Covering (-8.2%)
• Reinforcing Steel Material (-5.0%)
Note: All other components (14% of the index) increased 2.4%.
Costs increased for several building components in the Minneapolis index this past quarter. Earthwork, concrete, and steel doors and frames saw the most notable increases. Flooring, paint and wall coverings, and reinforcing steel saw significant declines. Other index components were flat or saw moderate increases.
Advice for Building Owners
The COVID-19 pandemic had an immediate negative impact on commercial construction activity nationwide, including both upward and downward pressure on pricing. Wage increases from previously-negotiated collective bargaining agreements, productivity losses caused by new COVID-19-related procedures, and supply chain disruptions due to governmental orders were offset by a more competitive atmosphere. While the earlier tariff-driven disruptions are largely resolved, the current economic uncertainty has caused our industry to take pause and proceed carefully. We anticipate the potential for a reduction in construction costs through the remainder of 2020.
About this report: The Mortenson Construction cost index is calculated quarterly by pricing a representative non-residential construction project in Minneapolis and other geographies throughout the country. Local employment figures are from the Bureau of Labor Statistics.
For a more specific update or questions regarding this report, please contact:
Strategy and Market Development Director