Market Outlook
Executive Summary

By Brad Hayes
Executive Vice President
Director of Operations, Preconstruction & Estimating

Consistency has been hard to come by over the last 18 months, but we have found ourselves returning to one theme over and over again: resilience. Through all the ups and downs, the Pacific Northwest design and construction market has held its own as one of the strongest in the country, bolstered by a dynamic group of owners, architects, builders and subcontractors. Sellen has been building projects in the Puget Sound region since 1944, working through recessions, inflation and unprecedented growth. We have been fortunate to experience it all first-hand and play an active role in the transformation of our region, and we believe the future remains as bright as ever for the Pacific Northwest. While national industry forecasters predict slight downturns in volume for the immediate future, Sellen remains confident in the strength of our local economy, including the construction market, job opportunities and continued population growth.

Sellen’s Cost and Building Trends Report focuses on three topics that illustrate what we are seeing across the industry, with our partners, and within our organization. Our insights for each topic are based on extensive in-house data from the Puget Sound market, discussions with trusted partners, and research by national industry groups.

  • Escalation: As we grapple with the pandemic’s impact on supply chains, short-term volatility will continue to reign. However, more predictable conditions will arrive as soon as supply can catch up to demand, yielding escalation rates in-line with historical norms. We project annual escalation rates on the total cost of construction to be 8.5%, 7% and 5% for the next three years respectively. Rates should taper down to 3% – 3.5% by 2025.

 

  • 2018 International Building Code Revision Impacts: We now have a thorough understanding of the cost impacts associated with the new code requirements. The largest impacts are rooted in the new energy code requirements and the mechanical and enhanced façade systems needed to meet those requirements. Our team has provided thoughtful insights to help our partners plan for successful projects while considering these changes.

 

  • Integrated Design & Construction: Our industry is moving rapidly toward more integrated delivery models, and it’s incumbent upon builders to play an integral role in this journey. Sellen is reducing waste and adding value through proactive communication and best practices. Our goal is to enhance the preconstruction process so that we can improve documentation for construction teams and reduce the amount of supplemental information that needs to be issued after construction starts.

Click here to read about the first topic: escalation.

Click here to download the PDF version.