Student Housing Construction Costs Brief Summer 2023

Economic indicators are mixed, and the question remains whether we will have a recession or a soft landing in 2023. Below are some highlights.

• The Architectural Billings remain soft for the sixth consecutive month
• The Construction Confidence Index for sales and staffing levels moved lower in May, while profit margins increased
• Sales, staffing levels, and profit margins remain over the threshold of 50, indicating expectations of growth over the next six months
• Construction backlog is nearly unchanged from a year ago and from May to June
• Commodity pricing has softened but not for all materials
• Skilled labor continues to be difficult to find in most markets

What does this mean for the construction cost? While non-residential construction costs for materials and services decreased 0.6% between April and May 2023 according to the Associated General Contractors of America (AGC), some project types and materials saw increases of 0.1% to 0.8% between April and May. Although inflation continues to be lower this quarter than in the past seven quarters, it will not be zero.

This brief was prepared by David Mellema, Preconstruction Director; Shannon Spencer, Preconstruction Manager; and Emily Kessinger, Sr. Business Development Manager of The Weitz Company’s student housing team.

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