US construction on the rise, but tariffs and labour to drive higher costs

Growth in the American construction market is set to continue into 2019, according to the latest tender cost update for North America released by UK-headquartered Mace, a consultancy and construction company.

2018 saw a rapid increase in construction growth across the US, it said, led by the residential sector, with low borrowing costs and ongoing wage growth continuing to support demand for additional housing.

This is combined with an influx of foreign investment that is flooding major cities as a result of the uncertainty in other markets created by Brexit, said Mace.

It predicted that investment in aged infrastructure would regain momentum now that the mid-terms elections have concluded.

However, tariffs introduced on steel and aluminium combined with a shortage of available skilled labour will push tender prices up this year.

Mace said: "To date this has been tempered by contractors successfully passing costs through to clients. However with no slow down expected and prices expected to keep rising, the sector may reach a tipping point where high prices begin to impact investor confidence, potentially affecting approvals of major new construction projects."

James Harrison, operations director for Mace in North America, said: "Material tariffs and a labour market creaking at the seams will drive an increase in 2019 prices with large contractors becoming increasingly selective both how and what they decide to bid."

Photograph: NewCity, a 199-apartment mixed-use development, completed in Chicago in 2015 (Courtesy of developer, Structured Development)

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