Mortenson Raises Estimate for 2017 Chicago Construction Cost Increases to 4.5%

CHICAGO — With supplies of some key materials, equipment and labor tightening, Mortenson Construction has raised its estimate for non-residential construction cost increases in Chicago for 2017 from 4 percent to 4.5 percent, the highest among the major markets that the national builder and developer tracks. This year’s increase follows a 2016 jump of 4.3 percent in Chicago, according to the Mortenson Construction Cost Index.

“Chicago construction activity initially lagged other markets in recovering after the 2008 recession, but it has gradually caught up and is strong now,” said Dennis McGreal, Chief Estimator for Mortenson Construction’s Chicago office.

In the second quarter alone, the Chicago index climbed 1.9 percent and is up 4.9 percent over the same period in 2016. Costs for eight building component categories, including steel framing, fire protection, earthwork and plumbing systems, grew between 2.2 percent to 3.5 percent in the second quarter, noted McGreal. Another seven categories, such as elevators, gypsum board and HVAC systems, escalated at least 1.5 percent during the same period.

Companies with projects underway or in the planning stages are pivoting in reaction to increasing costs and market activity. “With local precast contractors very busy, procurement lead times have extended and pricing has increased. We have clients reconsidering which cladding system to use,” noted McGreal.

“For the $505 million Mercyhealth Riverside Campus that Mortenson is building in Rockford, we foresaw a potential labor and schedule challenge. The decision was made to have Mortenson prefabricate exterior metal stud wall panels at an off-site facility. This approach had the advantage of improved quality and labor control and expedited the schedule for enclosing the building,” McGreal explained.

Mortenson tracks and reports on major metropolitan areas in the U.S. including Chicago, Denver, Minneapolis, Milwaukee, Phoenix and Seattle. The Mortenson Construction Cost Index is calculated quarterly by pricing representative non-residential construction projects in various metropolitan areas. Employment figures are from the Bureau of Labor Statistics. The Mortenson Construction Cost Index is part of a portfolio of industry insights and market studies provided by Mortenson. It is available for download at

Posted by on Oct 1st, 2017 and filed under News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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