The skyline of downtown Phoenix continues to be punctuated by the steady presence of construction cranes, as new projects ensure the city's growth matches the pace setter by robust development activity from the previous quarters. A recent report by Rider Levett Bucknall indicates that seven cranes were in operation around the downtown area for Q1 of 2024, which echoes the count from Q3 of 2023, all within a six-mile radius. This data, highlighted in ABC15, suggests continuous progress with predominantly residential and mixed-use developments, not forgetting the imperative parking garage that's been constructed to accommodate the growing need for parking.
While these numbers do not approach the peak of 16 cranes seen in late 2020, they mark a significant bounce back from the lull of 2021 and 2022 when only a few cranes dotted the landscape. Downtown Phoenix saw a fluctuation in crane counts, previously hosting 11 in the summer, followed by nine earlier this year, as detailed by city officials in the Business Journal. The downtown area is witnessing the construction of approximately 2,400 apartment units this quarter alone, spawning concerns about potential overbuilding given the thousands of units delivered in recent years.
Complications have emerged however, most notably the paused construction of the X Phoenix multifamily tower, a high-end residential skyscraper, which has accumulated a chilling nearly $50 million in mechanic liens since October. This snag illustrates that, while cranes might signify growth, they aren't exempt from the complexities of urban development. Moreover, about 1,200 units are expected to hit the market this year in the downtown area, which could momentarily swell the inventory supply, though experts speculate that demand is likely to equalize within the coming years.
In the broader perspective, Phoenix's construction industry manifests a resilience unique among its peer cities. According to the Business Journal, cities like Calgary, Las Vegas, and Los Angeles are the lone markets among 14 major regions surveyed that witnessed an uptick in crane counts. In comparison, markets such as Chicago, Denver, San Francisco, and Portland experienced significant decreases, some over 20% from the last count. Phoenix stands out for maintaining a steady growth trajectory despite these trends.
Adding to the optimistic outlook, construction cost inflation in Phoenix has been relatively tame compared to the national average. From January 2023 to January 2024, the city saw a 4.61% rise in construction costs, which is below the U.S. average of 5.85%. Paul Brussow, the new president of RLB North America, conveyed his guarded confidence in the sector's trajectory. He emphasized that while private projects may ebb, the uptick in public funding for manufacturing and infrastructure undertakings could bolster industry growth, cementing a more robust foundation for the city's future.
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