2021 Construction Market Analysis

Q4-2021

CUMMING INSIGHTS Construction Market Analysis

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1

Summary

U.S. CONSTRUCTION MARKET OVERVIEW Q4 2021 Commodities prices remain well above their 2019 levels, although they are beginning to relax. Most notably, the price of lumber jumped by almost 200% early in the year, briefly putting it in league with precious metals. The exact cause of these increases varies by commodity — and ranges from environmental regulations to speculative buying to a lack of shipping containers — but is generally due to a mix of increased demand and constrained supply. Eased restrictions mean that demand has recovered much faster than suppliers can produce. Many of these issues are likely to persist into the new year, but we expect pricing to at least stabilize in early 2022.

In our last report, we said that the central question facing the construction industry was when — not if — things would return to normal. The last few months seem to have provided an answer: sometime in 2022. The next year is expected to be a return to form for the construction market in most of Cumming’s office locations.

Both the spike in activity in 2021 and the drop in 2020 can be explained by COVID-19. Projects that were cancelled or postponed in 2020 due to the pandemic resumed construction in 2021 as the construction market stabilized. Furthermore, a combination of shelter-in-place orders and record low interest rates created the ideal conditions for a boom in the residential sector. These two factors caused the market to be artificially subdued in 2020 and artificially elevated in 2021. Moving into the new year, we expect pre-pandemic trends to take over.

Markets that were declining before the pandemic should begin to decline again, and growing markets are expected to continue their growth. COVID-19 still poses a risk, but thanks to vaccines it is more understood and can be accommodated for.

The Omicron variant of the coronavirus has re-ignited fears of restrictions. It is far too early to say whether these concerns are valid, but initial figures indicate that it may be less severe (albeit more contagious) than other variants. Confidence in the market remains high, as vaccinations make COVID-19 a risk that can be planned for and mitigated, like any other risk to a project’s timeline. For those in the industry, we would again like to sound a note of caution on volatility, as we continue to see markets change on an almost daily basis. The timing of any project will be important, at least for the next few months.

Final construction employment figures have been released for the last quarter and are showing a steady increase in the number of workers. Some markets have added to their workforce, while in others employment remains well below pre-pandemic levels.

This is generally due to some markets lifting restrictions faster than others.

Overall, the outlook for next year continues to be positive. 2022 is unlikely to be as active as 2021, but things are expected to return to normal. Old trends are likely to take over as pandemic-related projects wrap up, and this will make contractors less likely to be caught off-guard by sudden changes in the market.

Daniel Pomfrett

National Director of Forecasting + Analytics DPomfrett@cumming-group.com Total Construction Market Forecast (x $1m, Nominalized 2012$)

Drew Lantz

Research Analyst DLantz@cumming-group.com

Xinyao Wang

Research Analyst Xwang@cumming-group.com

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TABLE OF CONTENTS This Quarter U.S. Construction Market Overview Q4.................................................................................................................2

The Data National Indicators.................................................................................................................................................................. 4 U.S. Annual Unemployment Rate....................................................................................................................................... 5 GDP Annual Growth Rate...................................................................................................................................................... 6 Consumer Price Index ............................................................................................................................................................. 7 10-Year Treasury Note............................................................................................................................................................. 8 Energy Costs .............................................................................................................................................................................. 9 Credit Markets .........................................................................................................................................................................10 Lending Activity .....................................................................................................................................................................11 Global Demand .......................................................................................................................................................................12 Global Growth Forecasts......................................................................................................................................................13 Currency Trends .....................................................................................................................................................................14 U.S. Dollar Index ....................................................................................................................................................................15 Material Price Trends ..........................................................................................................................................................16 Commodities Price Index.......................................................................................................................................................17 Domestic Materials Prices....................................................................................................................................................18 Labor Trends ...........................................................................................................................................................................19 Construction Employment ...................................................................................................................................................20 Volume + Activity ..................................................................................................................................................................21 Architectural Billings Index..................................................................................................................................................22 U.S. Construction Index.........................................................................................................................................................23 Cost Per SQ FT .............................................................................................................................................................. 24 Typical Costs by SF/by Location................................................................................................................................. 25

By Region East .................................................................................................................................................................................... 26 West .................................................................................................................................................................................. 35 Central .......................................................................................................................................................................... 45

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3

The Data

NATIONAL INDICATORS

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The Data: National Indicators

U.S. ANNUAL UNEMPLOYMENT RATE The U.S. unemployment rate fell by 0.4 percentage points to 4.2 percent in November of 2021 from 4.6 percent in October, which was well below market expectations of 4.5 percent.

It was the lowest jobless rate since February 2020, as the number of unemployed persons fell by 542,000 to 6.9 million.

Meanwhile, the labor force participation rate edged up to 61.8 percent in November, the highest level since March 2020, and is 1.5 percentage points lower than in February 2020. The employment-population ratio increased by 0.4 percentage points to 59.2 percent in November, up from its low of 51.3 percent in April 2020 but below the 61.1 percent reported in February 2020.

and wages increasing further. Nonfarm payrolls likely increased by 550,000 jobs last month after rising 531,000 in October, according to a Reuters survey of economists. That would leave employment about 3.7 million jobs below its peak in February 2020. Estimates ranged from as low as 306,000 to as high as 800,000 jobs.

Strong employment gains would add to solid consumer spending and manufacturing data in suggesting that the economy was accelerating after hitting a speed bump in the third quarter. They would also put an early interest rate increase from the Fed on the table. The Omicron variant of COVID-19, however, poses a risk to the brightening picture. While little is known about Omicron, some slowdown in hiring and demand for services is likely, based on the experience with Delta, which was responsible for the slowest economic growth pace in more than a year last quarter.

U.S. employers likely stepped up hiring in November as they scrambled to meet strong demand for goods and services, giving the economy a strong boost as another challenging year draws to a close, though worker shortages remained a constraint. The Labor Department’s closely watched employment report on Friday is expected to show a rapidly tightening jobs market, with the unemployment rate seen falling to a 20-month low of 4.5%

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The Data: National Indicators

U.S. ANNUAL GROSS DOMESTIC PRODUCT (GDP) The growth rate of Gross Domestic Product (GDP) is an important measure of the strength of an economy.

GDP in the United States is expected to reach USD 21,500 billion by the end of 2021, according to Trading Economics’ global macro models and analysts’ expectations. In the longterm, the United States GDP is projected to trend around USD 22,790 billion in 2022 and USD 23,420 billion in 2023, according to our econometric models.

also expect support from business investment and, critically, a rebound in private inventories. Government spending should also grow more rapidly as money associated with the infrastructure package begins to be spent. Finally, we are also increasing our inflation outlook for the second half of 2022. Recent bottlenecks in supply chains, elevated demand for some goods and services, and higher energy prices appear to be more persistent than previously thought.

The Conference Board forecasts that real GDP growth in the U.S. will rise to an annualized rate of 5.0 percent in Q4 2021, vs.

2.0 percent growth in Q3 2021, and that 2021 annual growth will come in at 5.5 percent year-over-year. Looking further ahead, we forecast that the U.S. economy will grow by 3.5 percent year-over-year in 2022 and 2.9 percent year-over-year in 2023. This forecast is a downgrade from our October outlook despite the recent approval of a large bipartisan infrastructure package by Congress. While this package will certainly benefit growth in 2022 and 2023, our forecasts had already assumed it would pass for several months.

Goldman Sachs recently cut its outlook for U.S. economic growth to 3.8% for 2022, citing risks and uncertainty around the emergence of the Omicron variant of the coronavirus. The firm now sees 2022 GDP growth of 3.8%, down from 4.2% previously on a full year basis, and Q4/Q4 growth of 2.9%, down from 3.3% before. Worker shortages could last longer if people do not feel comfortable returning to work due to the variant, according to the note. Goldman pointed out that the spread of the virus could worsen supply shortages should other countries implement tighter restrictions, while an increase in vaccination rates among foreign trade partners would help prevent severe disruptions.

Next year, the bulk of economic growth will be associated with continued expansion in consumer spending. However, we

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The Data: National Indicators

CONSUMER PRICE INDEX (CPI) The Consumer Price Index is a measure of inflation and an indicator of the cost of living in different places.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in October on a seasonally adjusted basis after rising 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 6.2 percent before seasonal adjustment. The monthly all-items seasonally adjusted increase was broadbased, with increases in the indexes for energy, shelter, food, used cars and trucks, and new vehicles among the larger contributors. The energy index rose 4.8 percent over the month, as the gasoline index increased 6.1 percent and the other major energy component indexes also rose. The food index increased 0.9 percent as the index for food at home rose 1.0 percent. The index for all items (except food and energy) rose 0.6 percent in October after increasing 0.2 percent in September. Most component indexes increased over the month. Along with shelter, used cars and trucks, and new vehicles, the indexes for medical care, household furnishing and operations, and recreation all increased in October. The indexes for airline fares and alcoholic beverages were among the few to decline over the month. The all-items index rose 6.2 percent for the 12 months ending October, the largest 12-month increase since the period

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ending November 1990. The index for all items (except food and energy) rose 4.6 percent over the last 12 months, the largest 12-month increase since the period ending August 1991. The energy index rose 30.0 percent over the last 12 months, and the food index increased 5.3 percent.

U.S. consumer prices rose last month at the fastest annual pace since 1990, cementing high inflation as a hallmark of the pandemic recovery and eroding spending power even as wages surge. Higher prices for energy, shelter, food, and vehicles fueled the supercharged reading and indicated inflation is broadening out beyond categories associated with reopening.

With inflation likely to remain hot and the labor market firmly on the path toward recovery, we now project an earlier lift-off for the federal funds rate. We look for the Federal Open Market Committee to raise the target range for the federal funds rate by 25 basis points in Q3 2022 and another 25 basis points in Q4 2022. We expect two additional rate hikes of similar magnitude over the course of 2023.

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The Data: National Indicators

10-YEAR TREASURY NOTE The 10-year Treasury Note is the most popular debt instrument in the world.

It is generally seen as a safe place to invest when the market is volatile, because the federal government is essentially guaranteed to repay it. Interest rates are generally driven by demand — high demand means low interest rates — and behave similarly to other long-term loans like 10- and 15-year mortgages. In general, demand for treasury notes is high when there is a lot of uncertainty in the market. However, by pushing interest rates down it can drive demand for real estate and thereby help to shore up the construction industry.

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More than half (51%) of advisors forecast 10-year Treasury interest rates to hover between 1-2% for 2022, but 41% are forecasting rates at 2-3% or more. Just 8% see rates going down to between 0-1%.

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The Data: National Indicators

U.S. ANNUAL ENERGY PRICES In recent months, global gas prices hit record highs as utilities around the world scrambled for LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia, where energy shortfalls have caused power blackouts in China.

Following those global gas prices, U.S. futures jumped to a 12-year high in early October but have since pulled back because the United States has plenty of gas in storage and ample production for winter. Overseas prices were currently trading about nine times higher than U.S. futures. Data provider Refinitiv said output in the lower 48 states of the U.S. averaged 97.4 billion cubic feet per day (bcf/d) in December, topping the monthly record of 96.5 bcf/d in November.

low-income people, even as it attempts to implement a climate agenda that would see America move away from fossil fuels and has released 50 million barrels of oil from the national strategic reserve to help dampen costs.

Brent oil, the main driver of prices at the pump, is expected to average $70 a barrel in 2022. That’s down from the average of $84 in October and $81 in November.

Gasoline prices have hit a seven-year high in the U.S. due to the rising cost of oil, with Americans now paying about $3.40 for a gallon of fuel compared with around $2.10 a year ago. The Biden administration has warned the price hikes are hurting

Sources: Historic - Federal Reserve Bank of St. Louis Forecast - Wall Street Journal - Bi-monthly Survey

Sources: Historic - Federal Reserve Bank of St. Louis Forecast - U.S. EIA

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The Data

CREDIT MARKETS

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The Data: Credit Markets

U.S. REAL ESTATE + CONSTRUCTION LENDING ACTIVITY Real estate development is heavily dependent on lending liquidity, which feeds construction projects and thereby creates demand for materials and subcontractor capacity.

When conditions are favorable for lenders, therefore, construction volume tends to increase.

30-year mortgage rates have started to rise again this quarter, but could fall if concerns and case numbers with the Omicron variant grow. If coronavirus-related economic strain outweighs rising inflation from the Fed, we could see interest rates taking a few steps down. It’s unlikely mortgage rates will go down in 2022. The ultra-low rates enjoyed by homeowners and buyers in 2020-2021 were largely driven by the COVID-19 pandemic. As the pandemic (hopefully) recedes in 2022, rates should keep on climbing.

We have noticed the loan activities of the residential and commercial real estate markets continue to become slightly more active by the end of 2021. Loans associated with construction and development, meanwhile, share the same trend, with an increase of about 1% relative to last quarter. This indicates that confidence in the market is high and construction activity is slowly returning, despite abounding concerns about the spread of the new Omicron variant.

SOURCE: Federal Deposit Insurance Corporation

SOURCE: Bankrate.com

SOURCE: Federal Deposit Insurance Corporation

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The Data

GLOBAL DEMAND

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The Data: Global Demand

GLOBAL GROWTH FORECASTS The scale and longevity of the global inflation shock has taken most forecasters and central banks by surprise and is bringing forward the start of global monetary policy normalization.

Entering 2022, new variants of COVID-19, elevated inflation, and withdrawal of fiscal and monetary support present risk for the robustness of recovery. GDP is nevertheless expected to continue growing above trend (3.5% in the US, 4.4% in the euro area, 3.6% in Japan, and 4.6% for the UK) over the course of 2022, even if, in most cases, it normalizes to a degree from the elevated early-recovery growth of 2021. China is seen growing nearer to its trend of 5%. As expected, full economic normalization has remained vulnerable to renewed introduction of restrictions as transmissible virus variants challenge public health systems, though we see severity of virus risk for economic recovery continuing to moderate with time as governments adopt more targeted responses, the virus becomes more transmissible but less lethal, and businesses and people adapt how they do business. Nevertheless, risk to the 2022 outlook appears skewed on the downside.

A strong recovery in global aggregate demand in nominal terms over the past year has not been matched by an equal recovery in output. Supply bottlenecks resulted in real GDP expanding by less than expected in Q3 2021, with inflation being stronger than expected. Fitch Ratings has cut its 2021 growth forecasts for the U.S., Germany, and Japan, reflecting recent supply-chainrelated disruptions to industrial production. We have lowered global GDP growth by 0.3pp since the September Global Economic Outlook, to 5.7%. This is still the fastest rate since 1973 though, and far from stagflation. Fitch has also trimmed its world growth forecast for 2022 to 4.2% from 4.4%, but this primarily reflects a more intense slowdown in China. The policy response has been slower than anticipated and while we expect more easing announcements in the coming months, we now forecast China’s growth to fall below 5% in 2022. The sharp rise in global consumer goods prices since March primarily reflects a huge surge in goods demand, fueled by stimulus measures, particularly in the U.S. We expect goods prices to stabilize in 2022 as spending switches back to services, as strong investment boosts goods supply and as fiscal stimulus is unwound. But the risk of inflation pressures broadening is making central banks nervous. Inflation has become a public concern — now amplified by energy price shocks — and inflation expectations have increased.

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The Data

CURRENCY TRENDS

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The Data: Currency Trends

U.S. DOLLAR INDEX It was another week of strength for the USD, further clawing back losses from last Friday’s Omicronfueled sell-off. EUR/USD, GBP/USD, and AUD/USD are nearing key inflection points on the chart.

EUR/USD: The euro dipped against the dollar on Tuesday as a firmer dollar and U.S. Treasury yields weighed on the euro. The dollar index steadied, hanging on to an overnight jump made with U.S. yields as investors hoped early signs the Omicron variant may be mild will be proved correct.

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GBP/USD: Sterling was pinned near 2021 lows against the U.S. dollar on Tuesday thanks to a broadly sturdy greenback and growing expectations that the Bank of England will keep interest rates unchanged next week. The dollar index was steady and riskier currencies picked up as traders bet that the Omicron variant would not be as severe as previously expected.

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The Data

MATERIAL PRICE TRENDS

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The Data: Material Price Trends

COMMODITIES MATERIAL PRICE INDEX The Markit Materials Price Index (MPI) is expected to further decline in the fourth quarter, after a dramatic and unexpected rise in the second quarter of 2021.

As construction activity returns to or even exceeds prepandemic levels, the industry is grappling with a worsening labor shortage. The shortage is due to a number of reasons, including members of the workforce opting to retire early in response to the pandemic and others yet to return amid health concerns. This trend is expected to continue into 2022, pushing labor cost escalation higher than in previous years. With owners and clients focusing more on sustainability, understanding and

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reducing carbon cost in construction is becoming a priority. We expect demand for sustainability-focused services and materials to increase across the industry.

We expect prices to fall steadily through 2022. Production for most commodities is beginning to catch up to demand. As the economy reopens and restrictions are lifted, we expect prices to fall further.

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The Data: Material Price Trends

DOMESTIC MATERIAL PRICE INDEX Altogether, construction material prices will likely increase 18.4% in 2021, the largest increase since its data collection began in 1995.

All the increases in 2021 should have already occurred, with price increases recorded for each month from December 2020 through July 2021. The Bureau of Labor Statistics’ preliminary data for August 2021 points to a price decline, and IHS Markit analysts expect that prices will generally decline through the end of 2022.

Statistics, plywood prices declined 11.5% in August, but there is still plenty of room to fall. Plywood prices could fall as quickly as softwood prices did since softwood supply has returned. As such, we expect prices will continue to ease through the rest of 2021.

On the positive side, a broad price correction appears to be underway in commodity markets. The IHS Markit Materials Price Index fell 14% in the four weeks that ended November 11th, and it stands 20% below its mid-May peak. Shipping rates and prices of lumber, ferrous metals, and coal are retreating from exceptional highs. With normal lags, the declines in raw material prices should bring some relief to finished goods markets in the first half of 2022. However, natural gas prices are expected to stay elevated through the Northern Hemisphere’s winter and then decline as depleted storage facilities are refilled.

Many of the price increases were driven by increasing construction activity while supply had yet to recover. This mismatch between supply and demand pushed prices higher and was further exacerbated by other issues such as logistics problems and ongoing global COVID-19 outbreaks.

U.S. construction demand is expected to grow a moderate 2% in 2021; this is buoyed by the residential market, while nonresidential construction activity is lackluster. Looking ahead, residential construction demand will soften as housing demand starts to wane, while nonresidential construction will slightly improve but remain soft.

Global consumer price inflation is projected to pick up from 2.2% in 2020 to 3.7% in 2021, its highest rate since a 5.0% advance in 2008. As agricultural and industrial commodity prices retreat, consumer price inflation will ease to 3.5% in 2022 and 2.7% in 2023 and 2024.

Plywood prices are starting to decrease in North America, as the large softwood lumber price declines are finally filtering through to softwood markets. According to the Bureau of Labor

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The Data

LABOR TRENDS

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The Data: Labor Trends

U.S. CONSTRUCTION LABOR TRENDS As 2021 draws to a close, the construction labor market remains in flux. Some markets, like Honolulu, have more people working in construction than ever before.

Other markets, like New York, remain well below their prepandemic levels. These trends are likely to continue in the short term, although some markets could see a rapid recovery. It is far too early to say how much of this change is due to pandemicrelated trends in demand and how much of it is due to broad demographic trends.

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As we look further at details of the labor market, things are looking up as well. Unemployment is on track to fall below 3% by the end of the year — the first time it has done so since 2019.

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The Data

VOLUME + ACTIVITY

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The Data: Volume + Activity

AIA ARCHITECTURAL BILLINGS INDEX The American Institute of Architects’ Architectural Billings Index (ABI) is a good leading indicator of construction activity that is published on a monthly basis.

It is compiled nationally, regionally, and by sector, and generally predicts conditions in the market over the next six to nine months. Values above 50 indicate growth, while values below 50 indicate a decline.

that things are beginning to return to normal. The Northeast, meanwhile, has been trending up. Restrictions here are likely to be some of the last to be eased, so things here are lagging behind other regions.

The ABI has been abnormally high through most of 2021, as the market began to recover. Now, with the recovery well underway, it is beginning to decline again. Its most recent figure was 54.6, down from 57 in April. This is somewhat misleading since the market is not declining, but rather the growth rate is decreasing.

Although residential construction has been generating a lot of buzz lately, the industrial and commercial sector is the current leader with a score of 58.4. The institutional sector is next, with a score of 55.4, followed by the residential sector with a score of 54.7.

The Midwest has emerged as the most active region, and the most recent figures there show 58.4. There has been somewhat of a decline in all markets except for the Northeast, indicating

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The Data: Volume + Activity

U.S. CONSTRUCTION VOLUME TRENDS Trends in the construction market that were present before the pandemic struck are set to resume in 2022. Much of the growth of the last year was due to many markets working through a backlog created by the pandemic. rather than a booming market for renovations. The recently passed infrastructure bill has the potential to create a lot of construction improving roads and bridges.

As many of these projects are wrapping up, old trends are set to resume.

The residential sector is expected to remain strong, particularly in the West. Going forward, this is expected to be due to growing cities like those in the Bay Area and Mountain West

* This includes religious buildings, amusement, government communications and public recreation projects.

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The Data

COST PER SQUARE FOOT

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NOTES:

The Data: Cost Per SQ FT

U.S. CONSTRUCTION COSTS PER SQUARE FOOT

a. Costs represent current construction costs only. Land acquisition, professional fees, permits, FF&E and soft costs are not included. b. Costs are for complete structure shell and interior build-out to five feet out and excludes sitework. c. Costs represent typical specifications for the location identified, and do not account for unique site conditions. d. Cost represents projects built within city limits. Projects buiild in regions adjacent to the municipality may cost less.

An in-depth look at construction costs per square foot in the United States.

This construction market analysis includes detailed information on residential, commercial, healthcare, primary and secondary education, higher education, public and community facilities, and parking structures.

U.S. Cost per Square Foot of Gross Floor Area 2021 San Francisco

Los Angeles

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Single Family Detached-Medium Quality

$386

$322

Apartment/Condominium-Mid Rise

$584

$449

Single Story

$437

Mid-Rise

$870

High Rise

San Diego

Las Vegas

Seattle

Portland

Honolulu

Denver

Chicago

Nashville

Atlanta

Dallas

Miami

Orlando

Washington, DC

Philadelphia

New York

Boston

Raleigh-Durham

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

High (US$/ SF)

Low (US$/ SF)

$241

$65

$246

$139

$223

$116

$310

$258

$294

$245

$355

$296

$383

$115

$353

$294

$258

$215

$234

$195

$228

$190

$225

$187

$230

$192

$276

$230

$304

$254

$396

$330

$337

$281

$222

$186

$529

$294

$503

$273

$469

$361

$469

$361

$445

$343

$537

$413

$314

$133

$534

$411

$390

$300

$394

$303

$383

$295

$378

$291

$387

$297

$418

$322

$512

$393

$859

$461

$510

$392

$373

$288

$364

$395

$327

$381

$314

$350

$292

$350

$292

$333

$277

$401

$335

$203

$135

$399

$332

$291

$243

$294

$245

$287

$239

$282

$235

$289

$241

$313

$260

$382

$319

$448

$373

$381

$318

$279

$233

$726

$567

$371

$466

$359

$698

$582

$629

$501

$597

$476

$600

$500

$293

$216

$795

$663

$580

$484

$586

$489

$571

$476

$563

$469

$576

$480

$623

$519

$762

$635

$892

$744

$760

$634

$557

$465

$1,001

$833

$688

$458

$678

$430

$803

$669

$696

$561

$661

$533

$690

$574

$485

$345

$914

$761

$667

$556

$674

$561

$657

$547

$647

$539

$662

$551

$716

$596

$876

$729

$1,026

$854

$874

$728

$641

$533

Neighborhood Strip Center

$449

$375

$298

$165

$294

$163

$361

$301

$361

$301

$343

$286

$413

$345

$309

$258

$411

$343

$300

$250

$303

$253

$295

$246

$291

$242

$297

$248

$322

$268

$393

$328

$461

$384

$392

$327

$288

$240

Regional Mall

$671

$559

$607

$397

$583

$386

$538

$449

$538

$449

$511

$426

$617

$514

$461

$384

$613

$511

$447

$373

$452

$377

$440

$367

$434

$361

$444

$370

$480

$400

$587

$489

$687

$573

$586

$488

$429

$357

Residential

Commercial Office

Retail

Hospitality/Lodging Three-Star Hotel

$731

$555

$661

$425

$482

$348

$587

$354

$452

$376

$429

$358

$535

$459

$502

$364

$635

$483

$463

$353

$493

$333

$480

$336

$473

$350

$484

$358

$523

$436

$640

$534

$749

$625

$638

$532

$468

$317

$1,044

$761

$945

$679

$712

$456

$838

$458

$838

$591

$796

$561

$960

$691

$717

$491

$906

$648

$662

$473

$708

$480

$685

$464

$675

$455

$691

$465

$747

$516

$914

$762

$1,108

$892

$912

$760

$673

$456

Warehouse-Regional Distribution

$315

$225

$285

$203

$273

$194

$253

$180

$253

$180

$240

$171

$289

$207

$216

$155

$288

$206

$210

$150

$212

$152

$207

$148

$204

$145

$208

$149

$225

$161

$276

$197

$323

$231

$275

$196

$202

$144

Warehouse-Light Industrial

$350

$250

$317

$226

$304

$219

$281

$201

$281

$201

$267

$191

$322

$230

$240

$172

$320

$228

$233

$167

$236

$168

$230

$164

$226

$162

$232

$165

$250

$179

$306

$219

$359

$256

$306

$218

$224

$160

Manufacturing-Tech Laboratory

$874

$729

$790

$659

$755

$625

$701

$585

$701

$585

$666

$556

$803

$670

$600

$501

$798

$666

$583

$486

$589

$491

$573

$478

$565

$471

$578

$482

$625

$522

$765

$638

$895

$747

$763

$637

$559

$467

$1,433

$1,075

$1,296

$973

$1,238

$929

$977

$733

$782

$566

$743

$538

$1,455

$1,092

$729

$528

$1,113

$835

$812

$610

$821

$616

$799

$600

$787

$591

$806

$605

$1,025

$770

$1,066

$800

$1,468

$1,102

$1,251

$939

$779

$585

Medical Office Building

$734

$612

$598

$498

$571

$476

$451

$376

$493

$398

$469

$378

$1,018

$849

$429

$357

$570

$475

$416

$347

$421

$351

$410

$341

$404

$336

$413

$344

$526

$438

$547

$455

$753

$627

$641

$534

$399

$333

Specialty Clinic

$918

$765

$748

$623

$714

$595

$564

$470

$663

$553

$630

$525

$1,213

$1,010

$536

$447

$713

$594

$521

$434

$526

$438

$512

$427

$505

$420

$517

$430

$657

$548

$683

$569

$941

$784

$802

$668

$500

$416

Elementary School

$392

$329

$410

$341

$391

$326

$291

$242

$291

$242

$276

$230

$416

$347

$249

$207

$314

$262

$229

$191

$244

$203

$238

$198

$234

$195

$240

$200

$324

$270

$317

$264

$464

$386

$395

$329

$232

$193

Middle School

$431

$362

$448

$374

$428

$357

$318

$265

$318

$265

$302

$252

$455

$380

$272

$227

$344

$287

$251

$209

$267

$223

$260

$217

$256

$214

$262

$219

$355

$296

$347

$289

$508

$423

$433

$361

$253

$211

High School

$475

$395

$493

$411

$471

$392

$350

$291

$350

$291

$332

$277

$501

$417

$299

$249

$378

$315

$276

$230

$294

$245

$286

$238

$282

$235

$288

$240

$390

$325

$382

$318

$558

$465

$476

$396

$279

$233

Academic/Classroom

$742

$618

$774

$645

$739

$616

$617

$515

$617

$515

$587

$489

$707

$589

$474

$421

$703

$586

$513

$428

$518

$432

$505

$421

$497

$415

$509

$424

$612

$510

$674

$561

$876

$730

$747

$622

$493

$410

Laboratory

$823

$640

$962

$801

$816

$637

$853

$711

$853

$711

$811

$675

$977

$814

$687

$553

$971

$809

$709

$591

$716

$597

$698

$581

$687

$573

$704

$586

$761

$634

$931

$775

$1,090

$908

$929

$773

$680

$567

Administration

$742

$628

$799

$666

$735

$626

$638

$532

$638

$532

$606

$505

$731

$609

$493

$412

$726

$606

$530

$442

$536

$447

$522

$435

$514

$429

$526

$439

$632

$527

$696

$580

$905

$755

$772

$643

$509

$424

Dormitory

$411

$344

$426

$401

$407

$343

$340

$276

$340

$276

$323

$262

$390

$316

$291

$237

$388

$315

$283

$230

$286

$232

$278

$226

$274

$223

$281

$228

$337

$274

$371

$301

$483

$392

$412

$334

$272

$220

$767

$474

$759

$627

$599

$463

$673

$557

$673

$557

$640

$529

$771

$638

$576

$476

$767

$634

$560

$463

$565

$467

$551

$455

$542

$448

$555

$459

$601

$496

$735

$607

$860

$711

$733

$606

$538

$444

Five-Star Hotel Warehouse/Manufacturing

Healthcare Acute Care Facility

Primary & Secondary Education

Higher Education

Public/Community Facilities Gov't Adminstrative Buildings Museum/Performing Arts

$1,272

$727

$1,151

$921

$1,099

$707

$1,021

$817

$1,021

$817

$970

$776

$1,169

$935

$874

$699

$1,162

$930

$848

$679

$857

$686

$835

$668

$822

$658

$842

$673

$910

$728

$1,114

$891

$1,304

$1,043

$1,111

$889

$815

$651

Recreation/Gymnasium

$546

$438

$494

$412

$490

$386

$438

$365

$438

$365

$416

$347

$502

$418

$375

$312

$499

$416

$364

$303

$368

$307

$358

$299

$353

$294

$361

$301

$391

$326

$478

$398

$559

$466

$477

$397

$350

$291

Police Stations

$822

$590

$718

$599

$686

$572

$637

$531

$637

$531

$605

$504

$730

$608

$545

$455

$725

$605

$530

$441

$535

$446

$521

$434

$513

$428

$525

$438

$568

$474

$695

$579

$814

$678

$693

$578

$509

$424

Parking Stuctures Below Grade-Multi-Level

$140

$93

$186

$120

$136

$93

$165

$135

$165

$135

$157

$129

$189

$155

$142

$116

$188

$154

$137

$113

$139

$114

$135

$111

$133

$109

$136

$112

$147

$121

$180

$148

$211

$173

$180

$147

$132

$108

Above Grade-Multi-Level

$99

$66

$98

$49

$98

$66

$78

$60

$86

$68

$82

$65

$107

$82

$67

$51

$89

$68

$65

$50

$65

$50

$64

$49

$63

$48

$64

$49

$69

$53

$85

$65

$99

$76

$85

$65

$62

$48

Copyright © 2022 Cumming Management Group, Inc.

25

By Region

EAST

Copyright © 2022 Cumming Management Group, Inc.

26

Atlanta, GA U.S. Construction Market | Market Snapshot Q4 - 2021 Atlanta will likely become more relevant as a financial and cultural hub in the coming years. This is reflected in its construction volume, which is expected to see small but sustained growth. The city has grown by almost 20% over the last 10 years, and all these new residents need a place to live and a way to get to work. This growth has created consistent demand for the residential and infrastructure sectors. Atlanta has departed from trends in other southern cities and invested in high-density, mixed-income residential projects. This is visible in its footprint, which has undeniably grown upwards rather than outwards.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Atlanta boasts one of the most educated workforces in the country, with adults here almost twice as likely to have a college degree than the national average. This has led many corporations to move their offices to the city, which has in turn kept unemployment low. Over the last year it returned to — and even improved upon — pre-pandemic levels. Construction employment remains below 2019 levels, which could drive labor costs up in the short term.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Jeremy Holt, Managing Director: jholt@cumming-group.com

Boston, MA U.S. Construction Market | Market Snapshot Q4 - 2021 Boston’s construction market managed steady growth in 2021. This is not expected to last, however, and pre-pandemic tends are expected to take over in 2022 and beyond. The market has been steadily declining over the last few years, as population growth slows and businesses move to where things are cheapest. 2021 saw a bit of a spike, likely partly due to pandemic-related residential construction and partly to resuming projects that were paused in 2020. Many other sectors, like commercial and retail, have been done a significant blow by the rise of e-commerce.

Even so, Boston has been steadily adding construction workers to its labor force over the last 10 years. It added workers over 2021 just as quickly as it laid them off in 2020, and today there are more than ever. If this trend continues, however, we expect labor to outpace volume and drive prices down in the next few years.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Mo Shehata, Managing Director: mshehata@cumming-group.com

Miami, FL U.S. Construction Market | Market Snapshot Q4 - 2021 If the number of new skyscrapers in Miami is any indication, the market is expected to perform quite well in the coming years.

Several infrastructure projects have finally finished this year, leading to a slowdown in volume relative to 2020. The market is expected to grow into 2022 and beyond, driven by several high-density residential projects.

Miami’s economy is quite diverse, but the tourism and leisure sectors still make up a significant source of employment. This is likely why unemployment remains above pre-pandemic levels:

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

tourism has not yet recovered. Things have been slowly improving, but Miami has some distance to go before a full recovery. It continues to be a leader in vaccination rates, which have helped it weather the Delta variant and could have the same effect with the Omicron variant. Construction employment is still below what it was before the pandemic; combined with an increase in construction in the coming years, this could drive labor costs up.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Sean McDermott, Regional Director: smcdermott@cumming-group.com

New York, NY U.S. Construction Market | Market Snapshot Q4 - 2021 The overall outlook for New York has not changed significantly since our last report. Strict measures to control the spread of COVID-19 caused the market to contract by around 4% in 2020, and continuing uncertainty around new variants has caused it to contract slightly further. Looking ahead, the market is expected to continue to shrink as the fallout from the pandemic bleeds into broad trends in where people live and work.

caseloads and high vaccination rates. This has come at the expense of the local economy — unemployment remains significantly above the national average and has been holding at around 9%. Construction employment has declined slightly since 2020, and this is likely to continue given the expected decline in construction. New York is likely to take a more cautious approach than the rest of the U.S., so these numbers are not wholly accurate. It is entirely possible that the market will bounce back and make a full recovery sometime next year.

The policies that New York implemented to control COVID-19 have generally been successful, and today the city enjoys low

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Mo Shehata, Managing Director: mshehata@cumming-group.com

Orlando, FL U.S. Construction Market | Market Snapshot Q4 - 2021 The Orlando market is still contending with the drop in tourism that came with COVID-19. Leisure travel is a key driver of the local economy — the city sees more tourists each year than Venice and Paris put together — so travel bans and shelter-in-place orders were catastrophic. There is, however, good news on the horizon. Orlando is still home to myriad attractions and amusement parks, so it remains a place that people want to visit.

As soon as tourism recovers, the market will begin growing just as it had before.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Tourism is a key industry here, but the economy is much more diverse than other cities with large tourism industries. The city is also home to several high-tech companies, defense contractors, and film studios. These industries kept unemployment lower than other cities and have contributed to Orlando’s economic performance. In anticipation of an active market in the next few years, the local construction industry has been steadily adding workers.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Volume vs Labor - Annual Increase/Decrease

Copyright © 2022 Cumming Management Group, Inc.

Construction Spending Index 2010-2021 (2010=1.0)

Top Regional Projects Sorted by Construction Value

CONTACT: Sean McDermott, Regional Director: smcdermott@cumming-group.com

Philadelphia, PA U.S. Construction Market | Market Snapshot Q4 - 2021 2021 stands out as an anomaly in Philadelphia. Its construction market has been steady, if not in decline, over the past few years due to a mixture of economic and demographic trends across the U.S. There simply is not as much demand for houses, roads, offices, and schools in tepid markets like Philadelphia or Chicago as there is in growing markets like Houston or Los Angeles.

Thanks to remote work and low interest rates, however, the residential market grew by almost 50% in 2021. These projects are finally wrapping up, and old trends are expected to resume.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Philadelphia represents a significant portion of Pennsylvania’s economic activity and has successfully pivoted from a manufacturing economy to a service economy in recent years.

Several Fortune 500 companies call Philadelphia home, and the city has been a major hub for medicine since the colonial period.

Even so, its unemployment rate has struggled to recover from the spike in April of 2020. This is expected to remain a significant obstacle to economic recovery for some time.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Mo Shehata, Managing Director: mshehata@cumming-group.com

Raleigh, Durham, Chapel Hill, NC U.S. Construction Market | Market Snapshot Q4 - 2021 Pre-pandemic trends are beginning to resume in the Research Triangle. As new houses and home renovations wrap up and people begin to return to their offices, the residential sector is expected to decline. Other sectors are expected to remain relatively constant over the next few years, with increases in one offset by decreases in another. As Raleigh is one of the fastestgrowing cities in the nation, the residential sector is the largest by far.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

In an area known as the ‘Research Triangle,’ it is no surprise that the area’s economy is centered around government research, universities, and technology companies. It is a contender for one of the most educated cities in the country, and this is a key driver of growth. Workers here were able to pivot to remote work with relative ease, and this has in turn kept restaurants, retail stores, and other services in operation. Both unemployment and construction employment have improved upon their prepandemic levels.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Jeremy Holt, Managing Director: jholt@cumming-group.com

Washington, D.C. U.S. Construction Market | Market Snapshot Q4 - 2021 Washington, D.C. remains a steady market, seemingly unaffected by trends in demand caused by COVID-19. The federal government employs roughly one in four of the city’s workers, with many others working as contractors and consultants. This insulates the city from economic downturns, and this has in turn insulated its construction market. Federal workers still have disposable income, which spurs economic activity and in turn helps the city’s construction market.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

The residential sector remains the largest here, as the population of the city and surrounding suburbs continues to grow. This is expected to remain the case in the coming years. D.C. is expected to invest heavily in its infrastructure as well — particularly in expanding connections between it and the surrounding suburbs.

Construction employment remains below 2019 levels, but as overall volume is expected to decline slightly, this is not expected to affect labor costs significantly.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Sean McDermott, Regional Director: smcdermott@cumming-group.com

By Region

WEST

Copyright © 2022 Cumming Management Group, Inc.

35

Honolulu, HI U.S. Construction Market | Market Snapshot Q4 - 2021 The Honolulu market has changed little since our previous report: it is on track to make a full recovery this year and grow well into the 2020s. The city is simultaneously one of the most isolated and connected cities in the world, thanks to its tourism industry and position at the halfway point between Asia and North America. This means that it suffered the economic consequences of the pandemic while avoiding the high caseloads of the rest of the country. Fortunately, the city has a diverse economy and managed to recover quickly.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010 - 2021 (2010 = 1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Andrew Tanton, Managing Director: atanton@cumming-group.com

Las Vegas, NV U.S. Construction Market | Market Snapshot Q4 - 2021 The COVID-19 pandemic has renewed Las Vegas’ efforts to diversify its economy. This has largely been a top-down effort, with city officials passing favorable tax laws to attract high-tech and health-related companies. This effort has had mixed success.

Rising costs in the Bay Area, however, present an opening for Las Vegas. To this end, the city has been investing heavily in infrastructure projects, data centers, and new schools. There are also residential developments that will hopefully hold tech workers one day.

Thanks to the prominent role that the city’s casinos play in the local economy, Las Vegas was hit particularly hard by COVID-19. Unemployment hit nearly 35% in April. Things have been improving, but there is a long road ahead. Construction employment remains below pre-pandemic levels. Unemployment remains high. As many of these new projects work their way through the pipeline, however, we expect these issues to correct themselves.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Pete Melucci, National Director: pmelucci@cumming-group.com

Los Angeles, Orange County, CA U.S. Construction Market | Market Snapshot Q4 - 2021 The economy in Los Angeles has improved over the last quarter.

Although earlier predictions seemed overly pessimistic in hindsight, there are still significant obstacles on the road to recovery. Construction employment remains subdued, while unemployment remains high — particularly among the city’s young and uneducated workers. Meanwhile, things like wildfires and earthquakes pose a unique threat. That being said, the city has made a lot of progress and there is still reason to be optimistic.

Many of these issues present an opportunity for construction.

Buildings will need to be renovated to comply with seismic and fire ordinances, and roads will need to be upgraded to accommodate a new light rail network. Zoning changes to protect against wildfires will open up new areas of the city to development. In the short term, the residential sector is expected to remain dominant. The city is expected to continue its population growth, and all of these people will need somewhere to live.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Mark Fergus, Regional Director: mfergus@cumming-group.com

Phoenix, AZ U.S. Construction Market | Market Snapshot Q4 - 2021 2022 is expected to represent a return to normalcy for the Phoenix market. 2020 saw the market grow by an impressive 22%, which was followed by steady contraction throughout 2021. In 2022, it is expected to approach something of a steady state, with growth predicted to be higher than pre-pandemic levels. The residential sector makes up the lion’s share of this growth, thanks to work-from-home policies and record-low interest rates. Many projects that began in late 2020 or early 2021 are beginning to wrap up, the cumulative effect of which is expected to cause the market to contract.

Phoenix is one of many cities that is hoping to become a haven for tech companies fleeing the rising costs of Silicon Valley. Many of the largest construction projects here are related to this — manufacturing plants for computer hardware and offices and apartments for tech workers are all at the top of the ticket. It is far too early to tell whether this will pay off, but early figures are promising — several high-profile companies have begun operations in the city.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Pete Melucci, National Director: pmelucci@cumming-group.com

Portland, OR U.S. Construction Market | Market Snapshot Q4 - 2021 Portland’s construction market is expected to remain stable and steady in the coming years. Construction volume has made a full recovery, while construction employment is well on the way.

Some of the largest projects here are related to things like light rail and highways, with plans to expand its streetcar network and a bridge across the Columbia River taking center stage. The Delta and now Omicron variants of the coronavirus have thrown a wrench into Oregon’s reopening plans, but there is still reason to be optimistic.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Portland benefits from its connection to railroads, interstate highways, international air terminals, and low energy costs. These advantages remain and are likely part of why unemployment remains below the national average. Portland boasts a number of technology companies, leading some to nickname it ‘Silicon Forest.’ This makes the city an attractive option for tech companies and their workers who are increasingly looking for cheaper alternatives to the Bay Area.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Kevin Herron, Regional Director: kherron@cumming-group.com

Sacramento, CA U.S. Construction Market | Market Snapshot Q4 - 2021 The Sacramento market managed sustained growth throughout 2021 and is expected to plateau in 2022. This is mainly due to the residential sector: in what has now become a familiar story, remote work and low interest rates have led people to remodel their homes or move out to the suburbs. This kept the market growing through the worst of the pandemic. Unlike in many other cities, however, the residential sector here is expected to remain strong in the next few years. The infrastructure sector is also expected to see a lot of growth as California pivots to green energy.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Sacramento’s status as California’s capital city has insulated it from the pandemic and recession, thanks to the city’s many government employees. Furthermore, many of the other industries in the city can be done remotely. This has kept unemployment below the national average, while the construction industry has added workers in anticipation of a booming market. New variants of COVID-19 add a lot of uncertainty to the market, but the forecast for Sacramento is still bright.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

Copyright © 2022 Cumming Management Group, Inc.

CONTACT: Kevin Herron, Regional Director: kherron@cumming-group.com

San Diego, CA U.S. Construction Market | Market Snapshot Q4 - 2021 The future looks bright for San Diego. Thanks to a booming housing market, the city has managed to continue its growth from 2019 onwards. This trend is expected to hold in the new year, with the market predicted to grow by around 7%. Unlike most of California, high-density, multi-family projects make up a large share of the residential sector. This is also expected to continue into the next few years as well.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

San Diego has been adding construction workers to its workforce throughout the last year, and today there are more workers than at any point previously. There is expected to be quite a lot to do in the coming years, thanks to a growing residential sector and other sectors coming back online. As the pandemic wears on, consumers are increasingly accepting the risk and returning to pre-pandemic spending habits. This has contributed to a steady drop in the unemployment rate.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Brooks Rehkopf, Managing Director: brehkopf@cumming-group.com

San Francisco, Oakland, San Jose, Sunnyvale, Santa Clara U.S. Construction Market | Market Snapshot Q4 - 2021 San Francisco has stood as a global hub for business and technology since the California Gold Rush of the 1850s. That reputation still stands today, and these two sectors have kept people employed throughout the pandemic. This has, in turn, created consistent demand for new construction and kept thousands of workers employed. The market is expected to grow even more in the coming years, primarily driven by the residential sector. Thousands of people move to San Francisco each year to work in the city’s many start-ups and high-tech companies, all of whom will need somewhere to live.

There are, however, a few clouds on the horizon. Living costs have spiraled well beyond what most people can afford, causing people to move further and further afield. The city simply cannot build fast enough to keep up with demand. In the short term, some companies are looking to relocate to cheaper cities and draw in workers remotely. This has the potential to put a dampener on the city’s growth and economy.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Kevin Herron, Regional Director: kherron@cumming-group.com

Seattle, WA U.S. Construction Market | Market Snapshot Q4 - 2021 2022 is predicted to represent a return to form for the Seattle market. Total construction is expected to grow by almost 6% this year before contracting slightly in the coming years. Rather than any external factors, this is mostly due to residential projects that began due to the pandemic wrapping up. Residential construction still accounts for more than half of all volume here, as is common on the West Coast — workers are moving back to the city center to be closer to jobs downtown.

Even with this expected decline, there is still much to do in Seattle’s construction industry. The city has added workers to its construction industry over the last year, and today there are more workers than ever before. Looking ahead, Seattle is expected to invest heavily in sustainability. The city pledged in 2010 to become carbon-neutral, and that date is fast approaching. In the pipeline are a tram network to get people out of their cars, new powerplants to end the city’s dependence on fossil fuels, and green buildings to take advantage of government tax credits.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Kevin Herron, Managing Director: kherron@cumming-group.com

By Region

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Chicago, IL U.S. Construction Market | Market Snapshot Q4 - 2021 The decline in Chicago’s construction volume does not tell the whole story. The city’s population has not changed significantly over the last 30 years, and there were as many residents in 2020 as there were in 1920. Cities experiencing sustained growth, like those on the west coast, need residential, commercial, and infrastructure projects to accommodate their new residents.

Chicago simply does not have this problem. Rather than expanding, therefore, Chicago’s construction market has pivoted to replacing and renovating existing structures.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Chicago still has some distance to cover before the economy returns to pre-pandemic levels. The unemployment rate is still considerably higher than before the pandemic, meaning that a lot of workers have yet to find something. Chicago has one of the most diverse economies of any city in the country. Combined with a low cost of living and connections to the rest of the country, this makes the city an attractive option for businesses looking to set up shop. Forecasts earlier in the year have proven to be optimistic, but there is still much to do in Chicago’s market.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Etienne Nel, Managing Director: enel@cumming-group.com

Dallas, TX U.S. Construction Market | Market Snapshot Q4 - 2021 The construction market in Dallas has proven to be steady and reliable, and this is predicted to continue. Residential projects that began during the pandemic are wrapping up, which will cause overall volume to decline in 2022 and 2023.

The infrastructure sector saw a lot of attention over the last few years, as remote work presented a unique opportunity for roadwork with little disruption. The overall forecast, however, has not changed significantly since our last report.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

The Dallas-Fort Worth Metroplex is one of the fastest growing cities in the country. On a typical day, 30 people move here.

Thanks to the many freeways and thoroughfares in the city, it has grown outwards instead of upwards. This creates consistent demand for roads, highways, and low-density commercial developments. This also means that Dallas has a larger construction market than denser cities of a similar population, which can improve existing developments rather than build new ones outright.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Sean McDermott, Regional Director: smcdermott@cumming-group.com

Denver, CO U.S. Construction Market | Market Snapshot Q4 - 2021 The Denver market has consistently outperformed forecasts since the year began. Final numbers should show the market growing by almost 20% in 2021, mainly due to the residential sector. 2022, however, is expected to represent a return to form for the market. The spike in activity over the last year likely has two causes: first, the wave of residential construction that has taken place in every city. Second, a lot of projects were either paused, cancelled, or put on hold when the pandemic started in 2020. Now that things have at least stabilized, these projects have finally resumed. This depressed volume in 2020 and increased it in 2021.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Denver lies nearly equidistant between large cities on the East Coast and Midwest, meaning that the city is a natural hub for distribution and warehousing. This has helped keep the city’s unemployment rate below the national average, although it still has some ground to cover before returning to pre-pandemic levels. Construction employment remains low; however, combined with the expected decrease over the next few years, this is not expected to drive up costs in the short term.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Mark Smith, Regional Director: msmith@cumming-group.com

Minneapolis, MN U.S. Construction Market | Market Snapshot Q4 - 2021 After a very active beginning to the year, construction in the Twin Cities is set to decline through 2023. This is not nearly as bad as it sounds, however. The market has simply been inflated in recent years, and it is beginning to return to normal. Employers are adjusting to working from home, people are returning to the city center, and the commercial sector is accommodating the rise of e-commerce. A few big projects are also nearing completion, further adding to volume for 2021.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

The local economy has also generally recovered, and today there are more people going to work than before the pandemic.

Construction employment is still below 2019 levels, but this is likely to remain so as overall volume decreases. Minneapolis and neighboring St. Paul have vaccination rates higher than the rest of the nation, meaning that the new Omicron variant of the coronavirus is not as worrying here as it is in less-vaccinated communities.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Mark Smith, Regional Director: msmith@cumming-group.com

Nashville, TN U.S. Construction Market | Market Snapshot Q4 - 2021 Nashville is frequently described as a 21st century boomtown, and the city’s construction volume reflects this. In a city that added almost 100 people each day to its population in 2017, it should come as no surprise that the residential sector is the largest here. The rise of e-commerce and remote work have kept commercial volume relatively constant as well, as these new residents can shop online and have goods shipped.

Infrastructure spending remains relatively constant, as the city pivots to maintaining its existing roads and bridges instead of building new ones.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Nashville’s recovery has been making steady progress over the last year. Unemployment is within a few percentage points of 2019 levels, and construction employment has grown steadily throughout the pandemic. The next few years are likely to see a decline in overall volume as the market adjusts to new trends in work and leisure. There is, however, plenty to do now.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Sean McDermott, Regional Director: smcdermott@cumming-group.com

Salt Lake City, UT U.S. Construction Market | Market Snapshot Q4 - 2021 Salt Lake City’s economy has proven to be robust and adaptable and has almost completely recovered from the recession caused

by COVID-19. There are, of course, still a few issues to contend with, but overall indicators are in line with 2019 levels. This includes construction volume, which is set to return to roughly pre-pandemic levels. The residential sector remains strong here, and the population continues to grow. The city is looking to become greener, which is reflected in its infrastructure volume.

Currently, most of Utah gets its electricity from coal and natural gas and is expected to invest in green energy to help reduce its carbon footprint and improve air quality.

Total Construction Market Volume by Sector (x $1m, Nominalized 2012$)

Salt Lake City and the surrounding Wasatch Front lead the rest of Utah in vaccination rates, although both are somewhat behind the national average. The city did not enact strict lockdowns like those on the East Coast to control the spread of COVID-19. The effects of this will take some time to fully play out, but the city has had both better economic performance and more cases per capita than its contemporaries back east.

Annual Volume (x$1m, 2012$)

* This includes religious buildings, amusement, government communications and public recreation projects.

Regional Construction Employment

Construction Spending Index 2010-2021 (2010=1.0)

Construction Volume vs Labor - Annual Increase/Decrease

Top Regional Projects Sorted by Construction Value

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CONTACT: Mark Smith, Regional Director: msmith@cumming-group.com