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San Francisco was recently identified as the most expensive city worldwide for commercial construction in 2019. Previously New York City had been at the top of the list, but is now in the second spot.

The ranking was determined through a survey by Turner & Townsend who looked at the average costs of six types of commercial construction in 64 international markets. The next most costly U.S. cities for commercial construction were Seattle, Chicago, Indianapolis, Phoenix, Atlanta and Houston.

Annual caps on new construction may slow demand.

In addition to high demand in the San Francisco and New York markets for new commercial space, skilled labor shortages and increased costs for building materials have impacted—and will continue to impact—construction costs. Some of the skills where there are labor shortages are in carpentry, electrical and HVAC*. Tariffs are expected to continue to push commercial construction costs higher in 2019.

Demand in the San Francisco market may slow due to annual caps on the total new square footage allowed to be built. Although there is a backlog of projects that exceed the limit of allowable new construction, the cap may slow the rate of new construction projects.

e2Value® offers an easy-to-use estimator that can accurately calculate replacement costs and actual cash value for virtually any commercial structure from smaller retail shops to larger, more complex facilities such as hospitals, warehouses, schools and manufacturing centers.