Turner & Townsend’s International Construction Market Survey (ICMS) has painted a stark picture of the global construction landscape, with North America emerging as the most expensive region to build. The U.S., in particular, dominates the list of the world’s priciest construction markets, claiming six of the top ten spots.

Driving this exorbitant cost is a perfect storm of factors. A robust economy, coupled with a surge in construction activity, has stretched labor resources to their limit. This perfect storm has resulted in a stubborn 4.2% average cost escalation predicted for North America in 2024, as outlined in the report. Political uncertainty casts a looming shadow, threatening to further dampen output.

Canada mirrors its southern neighbor’s challenges, with major infrastructure projects intensifying the competition for a dwindling labor pool. This scarcity has fueled cost escalation, especially outside major metropolitan areas. The nation's burgeoning manufacturing and data center sectors, while promising, exacerbate the labor crunch.

Despite the headwinds, North America remains a beacon for construction opportunities, particularly in the U.S. and Mexico. The region stands to gain significantly from the global trend of nearshoring, with sectors like advanced manufacturing, life sciences, healthcare, and data centers driving robust construction pipelines.

However, the industry faces a critical challenge: addressing the acute labor shortage. , executive vice president and North America head of real estate Lisa Woodruff, executive vice-president and North America head of real estate at Turner & Townsend, emphasized, “We need to address this capacity crunch to ensure we enable continued growth.”

The report highlights the escalating costs in specific markets. New York retains its crown as the most expensive, with costs surging 5% to an average of US$5,723 per m². San Francisco follows closely, with Los Angeles, Boston, Seattle, and Chicago completing the top six.

The global shift towards deglobalization and nearshoring is particularly pronounced in North America. U.S. policies aimed at boosting domestic production of technology have fueled demand, especially in the Southeast and Midwest. This trend is evident in the soaring construction costs for manufacturing facilities in Atlanta and Nashville.

Mexico, anticipating increased demand for components from the U.S. and Canada, is experiencing rapid cost escalation, particularly in Mexico City and Monterrey.

While North America grapples with its challenges, other regions face their own hurdles. Switzerland remains expensive, with Zurich surpassing Geneva to claim the third spot globally. London reenters the top ten, plagued by capacity constraints and skills shortages.