Midyear cost data gives mixed signals
The national average construction cost data is showing an increase of nearly 5% from 2022 to 2023 for the cost per square foot to build hospitals across the U.S., according to analysts from construction data and services firm Gordian, which is headquartered in Greenville, S.C.
This yearly cost per square foot has been on the rise and growing over the past four years.
However, when evaluating the numbers after the first quarter, analysts from Gordian are reporting a decrease in those square foot costs through its quarterly RSMeans City Cost Index database, which is indicating a decrease of as much as 8% in the cost per square foot for hospitals from the second quarter of 2022 to the same period in 2023.
Although prices are still elevated relative to pre-pandemic levels, the data indicates price regression in particular sectors, specifically in wood and some metal material products. This can be attributed to normalization in logistics and supply constraints. Most of the square foot costs for hospitals can be attributed to major systems, such as HVAC and plumbing.
While Gordian’s models show concrete material decreasing 1-2% per year through 2025, they anticipate materials like wood, plastics and composites to hit average increases of up to 6.5% per year in the same period. Because of this predictive data, Gordian anticipates sustained elevated costs for health care construction material and labor pricing through 2024 and 2025.
More data on construction and building materials costs for hospitals and other health care facilities is available in the accompanying charts, which were supplied by Gordian.