May 29, 2018

Seattle 7th most costly place to build worldwide

A new report by London-based Turner & Townsend ranks Seattle as the world's seventh most expensive city for construction.

The firm's International Construction Market Survey also lists Seattle as one of three “overheating” cities in a forecast of costs for 2019. The other two are San Francisco and Amsterdam.

Turner & Townsend rates markets as cold, lukewarm, warm, hot and overheating. Markets that are hot or overheating typically have high cost inflation because of intense competition for resources and labor.

Construction price inflation is estimated at 5 percent in both Seattle and San Francisco, matching 2017 levels, and the highest in the U.S. Amsterdam is expected to hit 4 percent.

The cost of construction in 46 global markets is projected to climb 4.3 percent this year, according to the report.

Turner & Townsend attributed the rising costs in Seattle and San Francisco to fast-growing tech companies.

The most expensive place to build is still New York City, where the average cost of construction climbed 3.5 percent to $362 per square foot. New York held the top spot last year too, but it has cooled since reaching an all-time high in 2016. The cooling was blamed on higher interest rates and a dip in construction spending.

San Francisco was the second most expensive city, with an average cost of $347 per square foot. Rounding out the top five are Hong Kong ($344), Zurich ($339) and London ($336).

Seattle ranked seventh worldwide, at $288 per square foot, behind Dublin. Last year Seattle was sixth.

But Seattle ranked fourth worldwide when it comes to skilled labor costs. Zurich topped that list at $104.10 an hour, including wages, insurance, pensions and other benefits. New York was second at $98.30 an hour, followed by San Francisco at $84.20 and Seattle at $72.50.

The report said skilled labor shortages have been a major force in driving construction costs up, with the top five cities seeing labor rates increase by 10 percent over the last year.