Cost Trend Update Bulletin – March 2021 Valuation

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Cost Trend Update Bulletin – March 2021

This edition of the Cost Trend Update Bulletin shows national averages for the U.S. from January 2015 to January 2021 and demonstrates how construction and equipment cost indices have performed over the past six years.

Construction Cost Indices

Through the first half of 2020 we saw flat construction cost inflation that was below historical average increases. This may have been a result of the COVID-19 lockdowns and other disruptions within the economy.

Equipment Cost Indices

All three sources referenced for equipment cost indices had significant increases in 2018 compared to the previous three years. The annual increases in 2019 retreated towards historical averages in all three indicators making it consistent with 2020.

Please be aware that cost indices are just average indicators of change; they are not absolutes, and there is no average building or average assemblage of equipment. After five to seven years, you should establish a new replacement cost basis by using a qualified valuation consultant.

Please contact Bradley Schulz to discuss establishing a new replacement cost basis.

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