Construction Cost Index
(JANUARY 2009 = 100)
The Minneapolis cost index was flat throughout 2019, trailing behind the national index. Compared to year-end 2018, the index has increased less than one percent in Minneapolis and 3.3 percent nationally.
(an indicator of future wage and activity trends)
The region’s residential construction employment was robust in 2019, with 6 percent year-over-year growth, but non-residential construction employment dipped 2 percent. Low unemployment in the region will continue to drive a tight labor market. We anticipate modest construction employment gains in 2020.
Building Component Trends
(Q4 2019 vs. Q3 2019)
• Structural Steel & Metal Decking (8.5%)
• Install Reinforcing Steel (5.0%)
• Susp. Acoustical Ceilings (3.2%)
• Earthwork (1.7%)
• Site Concrete (1.6%)
• Asphalt Paving (1.5%)
• Unit Masonry
• Cast-In-Place Concrete
• Fire Protection Systems
• Gypsum Board Systems
• Aluminum Entrances/Storefronts
• Steel Framing & Stair Erection
• Finish Carpentry/Millwork
• Roofing Systems
• Deck Formwork
• HVAC Systems (-1.4%)
• Reinforcing Steel Material (-2.2%)
• Electric Traction Elevators (-2.4%)
• Plumbing Systems (-3.7%)
Note: All other components (16% of the index) were flat.
While costs for most building categories remained largely flat to moderate in the most recent quarter, structural steel/metal decking material and reinforcing steel installation experienced relatively high growth. Four components experienced a decline.
Advice for Building Owners
The Minneapolis construction cost index held steady in 2019, trailing behind our national index which saw 3.3 percent year-over-year growth. While we continue to monitor the impact of both geopolitical and economic uncertainty, all signs point to stability for the construction industry in 2020. The Dodge Momentum Index (a leading indicator of future construction activity) increased in December, with moderate backlog in the market. Construction employment and materials costs should remain steady for the foreseeable future. We recommend owners plan on a 2.5% to 3.5% increase in 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:
Vice President, Project Development