Construction Cost Concerns Return

Construction Market News

The new tariffs imposed on China last week have raised concerns about another run up in construction costs again this year. Since late fall 2018, the upward pricing pressure created by last year’s tariffs has receded. According to the Bureau of Labor Statistics (BLS), the producer price index (PPI) for inputs to construction was 2.8 percent higher in April 2019 than 12 months earlier. Although still higher than consumer inflation or overall PPI, the inflation for construction had been as high as 9.6 percent higher year-over-year in spring of 2019.

The potential hike in material prices comes as evidence grows that contractor prices are rising nationwide as a result of short labor supply. The PPI for nonresidential building construction has risen to between five and seven percent, depending on the type of structure. Likewise, PPIs for subcontractors has moved progressively higher. April’s data saw highs of 7.9 percent year-over-year for concrete contractors, with inflation for plumbers and electricians at 5.4 percent and 5.5 percent respectively.

Another BLS report suggests that the increase in contractor pricing is the result of lower productivity, rather than higher wages. Construction wages remain at or below overall wage growth levels, with April’s wage growth at 2.8 percent year-over-year.

Construction News

As the Penguins have been promoting their development of the 28-acre former Civic Arena site – now branded as Centre District – and searching for a lead office tenant, PennDOT has let the contract for the critical Crosstown Cap project. Joseph B. Fay Co. was awarded a $29.3 million contract for the structure and park, which should start construction by July.

Another project in the spotlight recently, the $13.7 million Mellon Orchard South apartments, is expected to start this summer. Mistick Construction is the general contractor. RDC Design + Build is preparing to start work on the $18 million 1823 Franklin Park Apartments in Franklin Park.

Project Spotlight

PJ Dick is in the final stages of construction on the new middle school for the Environmental Charter School, a complete renovation of the 60,000 square foot former Rogers CAPA School in the Garfield neighborhood of Pittsburgh. The team of Wildman Chalmers Design Architects & Interiors and McKim and Creed designed a dramatic overhaul of the building’s systems to create an energy-efficient, high-performance school.

ECS Press Release 05.01.19 _1_

“Thinking Lab” specialty classroom at the Environmental Charter School.

The Rogers School was built in 1913. The $9 million renovations preserved the historic structure while replacing windows and insulation to improve the building’s envelope. The floor plan was re-worked, including new finishes, LED lighting and new technology.

The most significant change was the conversion of the original coal-fired heating to the complex HVAC system.  Featuring demand-based ventilation, there are sensors in each room that detect carbon dioxide levels and will provide additional fresh air on an as-needed basis.  The system also utilizes ‘energy recovery ventilation’, which uses air that would normally be exhausted to precondition the incoming fresh air.  Areas of the building that are warmed by the sun will exchange tempered air with areas that are in the shade, which will significantly reduce the energy required to heat and cool the building.

Construction will be complete for new enrollment in August 2019.

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