Senior Living Construction Costs Brief Winter 2023
This special issue brief was prepared for the American Seniors Housing Association (ASHA) by Larry Graeve and Amy Burk of The Weitz Company.
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Major indicators are pointing to a slower construction market in 2023. Commodity pricing is leveling after two years of hyper inflation. Architectural billings are down, the construction confidence index is down, and wage increases are closer to normal; however, labor is still in short supply. The overall construction market is expected to contract 6% this year, but there is a shift in sector spending. Warehousing, data centers, and infrastructure volumes are expected to grow, while residential and commercial will see lower volumes in 2023. Most economists are predicting a recession; however, some feel we may have a “soft landing” and avoid a recession. Refer to Goldman Sachs report here for more details.
Despite improved commodity pricing, leveling of wages, and a slightly lower construction volume for the year, overall pricing is not expected to go down. Contractor backlogs are still very strong, and contractors will move to different sectors to maintain a full pipeline. Based on all of these variables, we anticipate a 1/2% to 3/4% per month escalation rate, much lower than the previous six quarters.
Check out our Senior Living Construction Costs Report to see what to expect for the first half of the year.
Senior Living Construction Costs Brief – Winter 2023
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