Weitz Senior Living Construction Costs Brief (Winter 2018)
This Special Issue Brief was prepared for the American Seniors Housing Association (ASHA) by Larry Graeve of The Weitz Company. For additional information, please contact:
- Larry Graeve (West Region) 515.286.4822
- Ben Bruns (Central Region) 515.240.5456
- Tom Doyen (East Region) 404.307.4549
The market continues to be strong as the Architectural Billing Index (ABI) rose to 55.9 in December 2017, up from 50.6 the previous month. As a leading indicator of construction activity, the ABI reflects a 9- to 12-month lead time before construction activity begins. We witnessed a 13 percent increase in lumber, primarily due to hurricane activity and concerns over the potential of tariffs imposed on Canadian lumber. The labor shortage will continue to be an issue for the foreseeable future, as this category is a large component of overall pricing increases. Though we see strong construction activity, we also see some leveling of inflation in many markets. Escalation rates vary across the country; some markets see a 3.5-5 percent annualized increase while the busiest markets see a 6-8 percent increase.