In boom times, construction costs typically increase more rapidly than the net cost of labor and materials, the report says. This happens as the overhead levels and profit margins are increased in response to the increasing demand. Similarly, in a weakened market, construction cost increases are dampened or may even be reversed due to reductions in overheads and profit margins.
The report also details indicative construction costs for eight building sectors in each city. These numbers range from $930 per square foot for general hospital space in Los Angeles and $800 per square foot for prime office space in New York City to $70 per square foot for warehouse space in Las Vegas and Phoenix.
