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Deconstructing Sticker Shock: NewGround White Paper
Discusses Why the Cost of Building is on the Rise
“Nationally, total construction costs are up 8% over last year’s costs and there has been no indication of a future slowdown. And while there has been a downturn in the residential market over the last few months, the total residential construction value is still 50% more than what it was four years ago. This small decrease does not off-set the mega-leap from $400 billion being spent in 2002 to cover $600 billion in 2006,” said Bob Mannion, Senior Vice President, Design and Construction, NewGround.
A number of construction materials are skyrocketing in price due to high energy costs, strong global demand, and market speculation. As price and construction demand increase, pure speculation in the commodities market is driving prices with no certainty or logic behind the fluctuations. But rising material costs are not the only factors driving up the cost of branch building. Consumer demand for a customized, dynamic financial institution is also elevating the cost of construction.
“The financial services industry is repositioning itself to meet the demands of society. Consumers today want customization and experiential design elements within the retail experience. We’ve re-invented the banking environment to meet marketplace demands, and in turn, the cost of creating these facilities has risen,” said Mannion.
“Today’s branch isn’t your father’s Oldsmobile. Financial institutions must be designed to attract, speak to, engage and retain specific customer segments to be competitive in today’s market. These new environments are driving the cost of a branch higher, but the investment in infrastructure will reward both customers and the bottom line,” said Mannion.
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