ARLINGTON, VA-DC developers may have to contend with a second wave of rising construction prices, according to newly released figures by the locally based Associated General Contractors of America. Last year’s respite from the steady rise in prices over the last few years is likely to be a temporary one, the association finds.

According to AGC, by the end of 2006 and the beginning of 2007, construction costs had slowed to a 3% growth rate. By the end of 2007, and throughout 2008, they will be up to 6%.

These numbers were generated on a national basis, Kenneth Simonson, chief economist of the association tells GlobeSt.com. “Prices tend to up in line between the regions so there is little variation from that perspective.” However, he adds, in the DC area, the absolute level of prices may be higher because of the region’s small manufacturing base, which in turn generates higher than average transportation costs.

It is not welcome news by developers and other builders, obviously. Simonson says local government agencies and school boards in particular are disappointed about the future impact these price increases will have on their budgets.

Some in the building community, while more cognizant of the ebb and flow of commodity prices were also hoping for a more stable forecast.

Michael Cunningham, senior construction manager of Jones Lang LaSalle’s Construction group tells GlobeSt.com while the forecasted price increase is not alarming, “it is a little steep. I am surprised to see it ramping back up again so quickly.”

The biggest burden will be felt by subcontractors, he says, assuming the price increases do materialize. “They are the first ones to feel it and they will price their work accordingly.”

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