Virtually all costs associated with construction will increase in 2021, according to recent research from JLL, as labor costs tick up between 2 and 5% and materials costs and volatility remain elevated.
"The coming year will bring much more stability across nearly every measure of the construction industry," the report notes. "However, after making it through a year where 93% of projects had to operate during stay-at-home orders, and over a quarter of projects navigated construction shutdown orders, almost anything would seem stable in comparison."
The big takeaway? A year of stability does not necessarily equal growth, according to JLL.
Recommended For You
Total construction costs increased from between 3.5 to 5.5% every year from 2012 to 2019, per historical data, and JLL expects 2021 to bounce back to be within that range (and possibly on the higher end of it). Material costs are also forecast to increase by between 4 to 6%, owing in part to pricing volatility that's been particularly sharp over the course of the pandemic. Prices for lumber and steel have spiked considerably, and JLL predicts demand for materials will continue to balloon over the course of the year as regional economies reopen. And while labor markets are still feeling more pain relative to materials markets, the firm also notes that labor has recovered "substantially" from initial post-pandemic shocks.
New project starts should remain lower than normal throughout the first half of 2021, but JLL predicts the pace will pick up by summer.
Nonresidential construction spending is expected to dip between 5 and 8% this year, but JLL predicts it will begin to creep up and increase month-over-month by the third or fourth quarter. But here's the good news: the industry should return to growth by 2022, JLL maintains.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
