Chi-150-North-Riverside
Chicago's 150 N. Riverside will be the largest project delivered this year and has boosted employment and costs.
CHICAGO—C onstruction costs in the Chicago region increased 4.6% in 2015, one of the top rates in the nation, and non-residential construction market here can expect costs to rise 3.5% to 4% in 2016, according to the Mortenson Construction Index , a quarterly study published by Mortenson Construction Co. , a family-owned firm. Of the six major markets that Mortenson measures, only Denver and Seattle can expect comparable increases in 2016 following a 4.2% cost increase for Denver and 3.6% increase for Seattle last year. Overall Chicago construction costs were driven up by a rising demand for subcontractors. But the price for many key materials and components from gypsum boards and plumbing systems to elevators showed little to no increase in 2015, although the lead time for obtaining these materials has grown due to higher work volumes, Mortenson found.   “Prices for materials are driven more by national and global demand and supply while labor is tied more to the local market,” Dennis McGreal , chief estimator for Mortenson's Chicago office, tells GlobeSt.com. “Chicago subcontractors and craft workers have been getting steadily busier, tightening the supply of skilled construction workers.” The company calculates the index quarterly by pricing representative non-residential construction projects in various metropolitan areas, he adds. The representative model and inputs remain the same quarter to quarter. The index includes over 70 inputs comprising material, labor and equipment components included in most non-residential building projects. Mortenson also draws on local employment figures from the US Bureau of Labor Statistics. “After lagging compared to other cities in the early years after the 2008 recession, the Chicago construction market continues to recover,” McGreal adds. “We've had two years of steady growth. While the rates for new employment and construction starts moderated in the second half of 2015, they both will remain at healthy levels this year.” The Chicago region also has two of the ten largest office projects in the nation that developers plan to complete in 2016: the 53-story 150 N. Riverside office tower and the suburban Schaumburg headquarters for Zurich Insurance. Other major area construction projects include:
  • Northwestern University's $400 million biomedical research center on its Chicago campus
  • Advocate Good Shepherd Hospital's $247 million addition and renovation in suburban Barrington
  • University of Chicago's $150 million Jeanne Gang-designed residence hall
  • $600 million McCormick Center Entertainment District, including a new hotel, data center, and sports arena

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM Digital Member, you’ll receive:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.

brianjrogal

Just another ALM site

Chicago
Denver
Development
Economy
Feature
National
Office
Seattle