Lack of Demand May Cause Cost Softening by Year-End

Wilkinson says data for podium-style buildings was added to the Kirksey study this year.

HOUSTON—Commercial construction costs were widely expected to come down in late 2015 and 2016—they haven’t declined yet, but the lack of demand should cause some softening before the end of 2016, says Kirksey Architecture. While lower oil prices have caused a slowdown in the local office sector, other markets (regional office, public, healthcare, retail and education) have replaced much of that volume. It’s also uncertain how the current excess of sublease space will affect construction costs for interiors because almost every project must be priced on a case-by-case basis, according to Kirksey Architecture’s 16th annual construction costs update.

Scott Wilkinson, AIA, an core and shell office building construction costs expert and Kirksey executive vice president/commercial team leader, tells GlobeSt.com:  “Market conditions in the construction economy are constantly changing. As a service to our clients, Kirksey annually polls leading general contractors to give an update on current conditions. Cost information and the trends reflect market conditions in and around the Houston area. This year we added data for podium-style buildings (office over parking garage) as many developers/owners analyze this option when it comes to tight sites.”