After significant increases in 2018, Seattle construction cost growth returns to average this cycle
Fueled by a lack of available labor and the indirect effects of rising tariffs, construction costs in the Seattle area continue to climb – albeit at a lower rate than 2018.
October 30, 2019
- Fueled by a lack of available labor and the indirect effects of rising tariffs, construction costs in the Seattle area continue to climb – albeit at a lower rate than 2018. According to a recent Mortenson report, Seattle’s construction cost index through H1 2019 stands 3.8 percent higher than that of H1 2018. And while this builds on the substantial growth of last year, it’s at a rate on par with average growth 2010-2017.
- Seattle has continued adding jobs, although year-over-year construction employment growth in Q2 2019 was at its lowest point since 2012. And while employment is expected to remain in good health through the end of the year, it’s unlikely to grow at a rate high enough moving forward to support the Puget Sound’s robust development pipeline at its current trajectory – specifically on the Eastside. Large projects like the East Link, Lynnwood Link, and Federal Way Link light rail extensions will increase competition for labor.
- Some of the recent growth in cost has been precipitated by manufacturers distancing themselves from Chinese suppliers in the face of rising tariffs, with the decrease in competition leading some opportunistic suppliers and manufacturers to increase prices.
- Despite construction costs returning to a familiar rate of growth, they have outpaced rent growth since 2018. Should this trend continue, some developments may be postponed until rents rise to justify the heightened cost to build.
Source: Mortenson, JLL Research