Seattle Nonresidential Construction Costs Hold Steady in a Competitive Bidding Environment
Key Cost Drivers
- Metal costs remain elevated relative to other materials, with steel, copper, and aluminum pricing driven by strong demand and constrained supply.
- Tariffs remain embedded in pricing, acting as a structural cost factor rather than a temporary disruption.
- Electrical and power-distribution lead times persist, shaping project costs and timelines, especially in data center and advanced manufacturing sectors.
Nonresidential construction conditions remained steady through the fourth quarter, with overall cost escalation continuing to moderate in the Seattle and Portland markets as well as at the national level. While quarter-over-quarter increases softened, year-over-year cost growth remains elevated, reflecting persistent input pressures in select materials and labor categories. National market sentiment continues to be shaped by uneven regional activity, as strong demand tied to data centers and advanced manufacturing contrasts with slower conditions in other sectors, contributing to varied pricing behavior.
From a supply chain perspective, conditions entering 2026 reflect improving resilience rather than full normalization. While transportation costs have stabilized and lead times have improved in many areas, metals pricing, tariffs, and long-lead electrical equipment continue to shape cost inputs.
Broader industry indicators point to a more measured construction outlook heading into 2026. Planning activity remains elevated compared to last year, particularly in data centers, infrastructure, and select institutional sectors, though month-to-month momentum has moderated. At the same time, architectural billings continue to reflect softness across much of the design pipeline, suggesting that while large-scale projects remain active, overall project volume growth may remain constrained in the near term.
The Seattle Mortenson regional office reported a modest cost increase of +0.30% this quarter. Across other Mortenson regional offices, Seattle and Portland recorded the smallest quarterly changes, at +0.30% and +0.32%, respectively, reflecting a highly competitive bidding environment. Chicago followed with a +0.78% increase, while Minneapolis and Salt Lake City each rose +1.16%. The remaining offices reported somewhat higher quarterly gains within a still-contained range: Denver (+1.52%), Phoenix (+1.58%), and Milwaukee (+1.96%).
Construction Cost Index Trend
Quarterly Cost Movement
Material and labor costs in Seattle remained largely stable this quarter, with minimal upward pressure. Competitive bidding conditions and steady labor availability continued to limit cost escalation, despite isolated pricing pressure in select materials.
At the national level, material and labor cost movements were mixed. Trade partner work increased modestly by +0.6%, while tracked construction materials rose +1.9%. Year-over-year, labor costs increased +5.6% on average, materials rose +9.1%, and trade partner work increased +6.2%, reflecting ongoing pressure in select categories
Transportation & Supply Chain Conditions
Transportation conditions continue to support stable construction costs heading into 2026, with low trucking prices, declining warehousing costs, and ocean freight rates expected to trend lower despite occasional shortterm fluctuations.
In the Seattle market, fourth-quarter cost changes were limited to a small number of scopes. Steel framing and stair erection, along with floor and wall tile, were the only areas showing notable increases. In contrast to national trends, reinforcing steel material costs declined sharply. All remaining scopes saw little to no meaningful change, resulting in minimal overall cost escalation.
Material Pricing Changes
(National Average - Cumulative Q4 2023 to Q4 2025)
Entering 2026, global supply chains are experiencing some resilience and stabilization as transportation costs and lead times decrease, but headwinds remain, including elevated metal prices, tariffs, and long-lead electrical equipment, which continue to shape construction costs.
Regional Market Activity
Regional construction activity in the Seattle market remained active but subdued during the quarter, with competitive bidding conditions reflecting a slowdown in several key sectors. Reduced activity in commercial office, higher education, and healthcare increased trade partner availability and competition, helping limit labor and material pressure. Across all regions, labor availability and general supply chain conditions have moderated but continue to selectively impact projects
Labor Market Outlook
Labor market indicators suggest improving workforce balance. Associated Builders and Contractors (ABC) estimate the industry will need about 349,000 net new workers in 2026, down from more than 500,000 in recent years, due to more modest construction growth. Most new worker demand will stem from retirements. “The industry needs to attract fewer workers than in recent years,” said ABC Chief Economist Anirban Basu. “It is also important to note that nonresidential specialty trade contractors have added 95,000 jobs since August 2024, and the industry will need even more workers than the model predicts should current spending projections prove overly conservative.”
Seattle Construction Employment
(Average Employment Year-Over-Year % Change)
Building construction employment in the Seattle metro averaged 20,400 workers per month in 2025—a 7% decline compared to the same period in 2024. Workforce conditions are stabilizing, as declining employment levels reflect softer demand rather than labor constraints, though pressure remains in select trades.
Source: Bureau of Labor Statistics, Seattle-Bellevue-Kent, WA – Construction of Buildings
Planning Momentum Accelerates
Planning activity gained momentum late in the fourth quarter. The Dodge Momentum Index rose 7.0% in December, driven by commercial and institutional planning strength in sectors such as data centers, healthcare, and warehouses.
Summary: Nonresidential Construction Outlook Entering 2026
The Mortenson Construction Cost Index shows continued moderation in cost escalation in Q4 2025. While some material categories still show elevated year-over-year increases, quarterly escalation has softened and several input pressures have become more predictable.
Supply chains have become more resilient in some sectors, reflecting diversification and risk mitigation efforts, though vulnerabilities remain. Transportation conditions are supportive, labor availability has moderated, and competitive bidding persists in many regions. At the same time, large-scale data center and manufacturing projects continue to drive localized demand pressures.
Taken together, these conditions point to a construction environment where thoughtful planning and flexibility are essential to achieving successful outcomes.
For a more specific update or questions regarding this report, please contact:
Jared Chapman
Chief Estimator
jared.chapman@mortenson.com
425.497.6648
Nate Jenkins
Director of Business Development
nathan.jenkins@mortenson.com
425.497.6610
Mortenson tracks and reports on eight metropolitan areas in the U.S. including Chicago, Denver, Milwaukee, Minneapolis, Phoenix, Portland, Salt Lake City and Seattle. The Mortenson Construction Cost Index is calculated quarterly by pricing representative non-residential construction projects in various metropolitan areas. It is part of a portfolio of industry insights and market studies provided by Mortenson.