2023 Construction Outlook

2023 will reveal a mix of historical firsts and a welcomed return to normalcy, but one thing is for certain: builders across the globe are establishing risk mitigation strategies, both in planning and construction, to keep projects moving forward.

Executive Summary

Construction activities will remain strong in the early part of 2023, especially in public education, institutional and industrial marketplaces; however, the Federal Reserve’s continued focus on controlling inflation will slow the rate of new construction starts to a more moderate level in Q4, continuing into 2024. For the first time in more than two years, material price increases and lead times will experience relief. The exception to this trend is mechanical and electrical equipment that will continue to see long lead times and significant price increases. These factors suggest a 6% to 8% increase in construction costs throughout 2023, with most of the increase occurring within the first three quarters of the year.

Several variables are driving the fluctuation in the market including construction labor forecasts, commodity and material prices and procurement lead times.

As your construction partner, CG Schmidt will continue to proactively monitor and provide insight to clients as our economic environment evolves. To access CG Schmidt’s complete 2023 Commercial Building Forecast in its entirety, request your copy below.