The pace of major construction activity in Portland remains lackluster, with just 14 big cranes operating in the city and no sign of a rebound ahead.
The latest RLB Crane Index suggests the sector has been static for a year at fewer than half the number of cranes that were operating in 2019. A steep decline began in early 2020 as the pandemic took hold.
Steeply rising construction costs and a shortage of skilled subcontractors are the main reasons why the crane count has fallen, according to Daniel Junge, Portland market manager for the construction consulting firm Rider Levett Bucknall, which compiles the crane index.
“You’re definitely seeing a lot of hesitance on the part of owners to go ahead on things,” Junge said.
Portland construction costs rose about 9% last year, according to Junge. He said cost increases have cooled a bit in 2023, to around 7% annually, but he said costs are still increasing twice as fast as they were before the pandemic.
That’s a big hit to a project’s overall price tag. For example, Junge said that health-care buildings that cost around $900 per square foot in Portland five years ago would now cost double that.
“They can only sustain so much escalation before it starts to become infeasible,” he said. “It’s really straining project budgets.”
Builders are feeling rising costs all over North America, but RLB isn’t reporting a similar slowdown elsewhere. The firm counted more than 500 cranes in the 14 markets it surveys, an all-time high. Denver and Phoenix were especially active, with big increases in residential projects.
While the rising cost of construction materials is an issue everywhere, Junge said another, even more significant problem builders have locally is finding people to do the work.
“In Portland, the big issue is our labor market,” he said. “We just don’t have a huge pool of really skilled, top-tiered construction subcontractors.”
Many experienced tradespeople are in their 60s, according to Junge, and he said there’s no pipeline of young people in apprenticeships waiting to take over.
“As an industry and as a state, we really need to focus more on incentivizing education in the trades and filling those roles,” Junge said.
Most of the 14 cranes in Portland are working on residential or mixed-use projects, according to RLB.
Activity is brisker in the suburbs, according to Junge, with data center construction “just going wild” and new semiconductor legislation raising the prospect of new computer chip factories. Overall, Junge said the regional economy is holding up OK – at least for major construction projects that need enormous cranes.
“It’s solid,” he said. “It’s not going gangbusters, but we don’t see a lot of really recessionary indicators yet.”
This is Oregon Insight, The Oregonian’s weekly look at the numbers behind the state’s economy. View past installments here.
-- Mike Rogoway | mrogoway@oregonian.com | 503-294-7699
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The Link LonkApril 16, 2023 at 09:06PM
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Portland’s skyline is a little emptier, with half as many construction cranes - OregonLive
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