Figures recently released by the Real Estate Research Council of Southern California at California State Polytechnic University in Pomona indicate that construction costs and the level of non-residential permits authorized for the first half of the year have continued to rise year-to-year for several years now.
Measured in terms of estimated construction costs, the council's second quarter 2000 Real Estate & Construction Report reveals that total building valuations for non-residential permits, consisting of office, retail, industrial and hotel/motel buildings, reached $2.15 billion. This is a slight increase from the almost $2.1 billion in valuations for the first half of 1999, but a steady incline from the $1.6 billion for the same period of 1998 and the $1.5 billion in 1997.
"It's hard to tell what's going on, on a quarterly basis," says Michael Carney, executive director of the council. "You need to look on a year-to-year basis."
Broken down by property type, office and hotel/motel properties have shown the strongest gains, with $203 million in office valuations for the first half of the year, and $119 million in hotel/motel valuations. Compared to the same period last year, office valuations went up 75%, while hotel/motel valuations increased 59%. Retail building valuations were up by 29%, but industrial evaluations were down 33%.
Construction costs were up 5% for low-rise, class C buildings from July 1999 to July 2000, with total cost at $2.1 million or $81.44 per sf. Likewise, construction costs for class B high-rise office buildings were up 4% year-to-year in July. Total cost was $22 million, or $102.67 per sf.
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