We\’ve all been hearing about the significant uptick in materials and labor costs associated with construction over the last number of months, particularly lumber which has been the focus of many a meme. That spike is beginning to show up in the cost of medical office projects breaking ground in 2021. At $438 per square foot, the average cost of MOB construction projects started is up 18% from a year ago as of the first quarter.
Despite this, medical office construction starts remain strong and have not declined with more than 24M square feet started in the last year. However, these cost increases, if sustained, could certainly be a headwind for new construction moving forward. Stay tuned as we continue to track developing trends coming out of the COVID-19 pandemic