San Francisco2018-09-26T12:43:26+00:00
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SAN FRANCISCO-OAKLAND-SAN JOSE-SUNNYVALE-SANTA CLARA

The seven straight years of significant growth that has seen the Bay Area construction economy more than double in output appears to be stabilizing but at record levels.

Although we don’t see any significant reductions in overall volume, over the next two years the market is projected to level off at the current historically high levels. There is likely a slight reduction in housing output, but competing factors are at play. A persistent lack of inventory combined with a record level of affordability as both house prices and mortgage rates increasing and limiting the number of buyers. Additionally, we have entered a more volatile global economic environment and the impacts on foreign real estate investors into the market has yet to be determined. With the exception of the education sector, all other sectors are predicted at almost identical levels of production across 2018 – 2020. Commercial office space is being driven largely by the tech and biotech sectors with significant new campus builds continuing for several years. This level of output has placed extreme strain on the available labor resources and has caused significant escalation of costs. Premier contractors are unlikely to engage in competitive bidding and negotiated awards are most commonly used. Key drivers are a fully utilized labor force and the Sections 232/301 sanction impacts, both of which will continue to drive construction costs up over the coming months

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