state funding is low. As a
result, far fewer publicly
funded RFPs have been
issued than in past years
and work has increased in
the private sector.
• Oil prices have surged
as U.S. stockpiles diminish and turmoil in the
Middle East continues to
be an issue.
• Barring any additional
prices will continue
to rise in 2014. As the
market continues to
improve and project
work increases, prices
are expected to continue
to increase, in tandem.
The federal government
has proposed a budget of
In 2014, although construction costs
increased, there is discontinuity between how
much clients are willing to pay for architec-
tural and design services and the true cost of
those services. During the last year, there has
been a consistent rise in clients expecting low
and extremely competitive pricing. In some
cases, clients have expected the same rates as
during the peak of the recession. The market
remains very competitive, with much upfront
design and budget pricing required before a
project is awarded.
Figure 1: In a typical biochemistry lab building, the key cost split is
architectural disciplines approximately 40% and MEP disciplines
approximately 40%. Source: HLW International, Faithful+Gould
At the time this report was compiled in June 2014, construction costs of laboratories continued to show an increase. Overall, costs have risen
about 3% from 2013 and construction costs
in the R&D sector have risen about 2.9%
since January 2013. Construction costs are
expected to rise around 3% during 2014,
extending into year 2015. This percentage of
increase is 1% lower than predicted in 2013,
demonstrating that the market is still in
recovery mode, but experiencing a somewhat
The construction market continues to show
signs of recovery. Although construction costs
have significantly increased, we are still not
seeing the pre-2009 increases. With market
stabilization, there is cause for a positive outlook, as well as more potential for growth in
the construction industry in 2014–15.
The most significant facts about the market
• 2014 reflects a market in slow recovery.
The current market is more stable than
previous years, and the first half of 2014
indicates a rising market in line with the
growth seen in 2013. The expectation is
that, overall, the market in the second half
of the year is expected to continue on that
• The overall market has increased about 3%
since 2013. The laboratory animal science
market has increased about 2% during that
same time period.
• Clients are approaching new work, emphasizing an increasingly tighter and more
aggressive budget and schedule.
• Although still budget conscious, clients
appear more willing to initiate major programs of work than they had in recent
• Labor rates have remained relatively stable
from last year. This is particularly the case
with the unions.
• Growth in the broader construction sector,
for example, major development projects
and high-end multi-family projects, should
adversely affect the availability of skilled
workers. This shortfall could drive higher
• The broader market continues to exhibit
healthy signs of improvement. The recent
round of quarterly earnings by publicly listed companies showed profits increasing at
a consistent rate.
• Civil engineering and infrastructure projects, including mass transportation, roads,
and bridges, have seen increased growth
from previous years with the support of
• The technology sector has demonstrated
the strongest growth by investors. This will
likely result in positive earnings for the
overall U.S. market.
• As the government struggles to implement
balanced solutions, concern among all
parties will continue to grow for the state
of public finance, both at federal and state
levels. Government spending remains under
heavy scrutiny given the current state of
public finances as the U.S. continues to
recover from the recession. Federal and
16 OCTOBER 2014 ALNmag.com
2014 Lab construction outlook
DESIGN/BUILD | John Gering, AIA and Carlie Campesi
Prospects continue to improve in the industry.