Despite Relative Strength In Selected Markets Costs Expected to Decrease Following Extensive Period of Growth
New York, N.Y – March 10, 2009 – (RealEstateRama) — Turner Construction Company, the nation’s leading general builder, today announced that the First Quarter 2009 Turner Building Cost Index, which projects domestic commercial building construction costs, has decreased 5.77% from the Fourth Quarter 2008. The First Quarter 2009 Index number is 866, down from 919 in the Fourth Quarter 2008. Since the First Quarter 2008, construction costs have decreased by 2.59 percent.
Karl F. Almstead, the Turner vice president responsible for the Turner Building Cost Index said, “The cost of construction has come down as construction spending has decreased and competition in the industry has increased. However, construction activity in the education, healthcare and public sectors continue to show strength and increased investment in green buildings across all segments are sources of optimism as potential beneficiaries of the economic stimulus legislation.”
“In the second half of 2008 commodity and material prices fell from their recent highs. Material prices are now stabilizing as a result of production cut-backs and inventory reductions. Labor costs are countering the downward cost trend with labor wage settlement increases in 2008, reflecting the demand prior to the market contraction in the second half of the year,” said Almstead.
Approximately 90% of Turner’s business is performed under contract arrangements where Turner provides extensive preconstruction planning services before the contract price is fixed and before construction starts. By providing preconstruction services and utilizing enhanced procurement strategies, Turner effectively manages the market risks associated with cost-related issues.
Turner has prepared the construction cost forecast for more than 80 years. Used widely by the construction industry and Federal and State governments, the building costs and price trends tracked by The Turner Building Cost Index may or may not reflect regional conditions in any given quarter. The Cost Index is determined by several factors considered on a nationwide basis, including labor rates and productivity, material prices and the competitive condition of the marketplace. This index does not necessarily conform to other published indices because others do not generally take all of these factors into account.
