February 10, 2026

RLB's Q4 report: ‘Uncertainty ... does not eliminate demand'

Graphics via RLB [enlarge]

Year-over-year inflation averaged 4.39% among the cities surveyed, but those annual cost jumps rose more steeply in the West.

Rider Levett Bucknall's most recent construction costs report paints a picture of a market softened by uncertainty, but selectively so.

“While many anticipated that economic uncertainty in 2025 would slow engagement across the construction industry, it didn't,” wrote Taryn Harbert, associate principal for the construction consultant. “Owners and developers didn't exit the roadway; they simply became more deliberate about which lanes they chose and how fast they were willing to travel.”

Nationwide, the Quarterly Construction Cost Report for the fourth quarter of 2025 said that, while commercial and institutional work has remained slow, data center and mega-project builds have remained “robust and resilient.”

Overall, the report for the quarter ending in October found construction spending down approximately 1.8% compared to the same period in 2024. Year-over-year, inflation averaged 4.39% among the cities surveyed, but cost jumps were steeper in the West.

Cuts to federal interest rates in October and December contributed to some refinancing of projects underway, but weren't enough to spur a rush of new construction starts, Paul Brussow, president of Rider Levett Bucknall North America, said in the report released last month.

At the same time, workforce shortages continue to plague the industry, and that's contributing to cost and schedule delays.

“Owners should plan accordingly, leveraging schedule and cost expertise to navigate workforce availability, productivity constraints, and associated cost impacts,” Brussow said.

SEATTLE AND THE WEST

Construction markets across the West are juggling high material costs, ongoing labor shortages and financing constraints, Harbert said. Overall, our markets have remained stable, thanks to infrastructure investment in transportation, water and broadband projects.

[enlarge]

Seattle’s quarterly rise in construction costs topped more moderate rises in Portland and Los Angeles (and San Francisco, not pictured, where costs rose 0.83% over the third quarter).

The West region (which the report defines as the cities of Phoenix, Las Vegas, Los Angeles, San Francisco, Portland and Seattle) experienced an average year-over-year construction cost increase of 4.45%, above the national average of 4.39%.

Cost increases from the fourth quarter of 2024 to 2025 were the greatest in Las Vegas (4.95%), Phoenix (4.76%) — and Seattle (4.58%). Honolulu, considered elsewhere in the report, vaulted over those rises with a 5.69% jump, year over year.

From the third to the fourth quarter, Seattle's costs jumped 1.22%, compared to a 1.07% rise in Portland and 0.83% in San Francisco.

Despite rising housing needs across the region and zoning and policy changes aimed at addressing those needs, developers are being cautious for now. In Portland and Seattle, construction firms are focusing on sustainability and local sourcing to manage costs and align with local goals, Harbert said.

STAYING AHEAD IN 2026

Looking ahead to 2026, low architectural billings can't be ignored. North American President Brussow said the weakened design pipeline reinforces the overall picture of projects not stopping outright but advancing at reduced speed.

“The takeaway from 2025 and into 2026 is clear: uncertainty can stall momentum, but it does not eliminate demand,” Brussow said.

Over the past year, the AEC industry has shown its ability to adapt and pivot to an ever-changing market, he said. Progress in 2026 hinges on the industry's ability to resolve labor shortages, manage procurement bottlenecks and project backlogs, and act early on interest rate cuts, helping spur private investment forward.

“Progress is underway — just not at full throttle — and the next phase will be defined by deliberate decisions about when, where, and how hard to accelerate,” Brussow said.