After years of rising and unpredictable construction costs, Milwaukee-area architects are confronting a new design reality – one in which creativity is as much about budgets as aesthetics. To bring projects to completion, firms are asking and answering new questions: Do you reduce the scope? Do you defer spaces or set up for phase additions? How do we use simple shapes? How can we panelize certain elements? Just to name a few.
Though construction cost increases have begun to stabilize in recent months, the effects of sustained inflation are still reverberating across the development world. According to the U.S. Bureau of Labor Statistics, construction input prices rose nearly 40% between 2020 and 2023, with more modest increases in the years since then. Implemented and contemplated tariffs could add a new element to rising construction cost trends.
Locally, architectural firms are finding creative ways to adapt.
For Peter Balistrieri, principal at the Milwaukee office of Minneapolis-based HGA, clarity at the outset of a project has become paramount.
“Every project is for a reason,” Balistrieri said. “Being clear about what the real purpose of the project is is critical for us to help inform all of the other things that we’re going to talk about, because now you also know that you have to make hard decisions because of higher costs, what you’re giving up.”
Balistrieri pointed out that building systems and complex infrastructure projects tend to carry the biggest cost burdens.
Joe Galbraith, partner at Wauwatosa-based Galbraith Carnahan Architects, sees mechanical, electrical and plumbing costs across projects capturing a greater share of the budget than in the past.
“Unfortunately, those are required systems, so there’s very few cost-cutting measures that can be done there,” Galbraith said.
Both also agreed that global supply chains are still a wild card.
“I do suspect that there are building types where a predominance of building materials come from China, for example multifamily often has countertops and cabinets, other furnishings and fixtures that come from overseas, that have and are probably going to continue to see impacts,” Balistrieri said.
With skilled labor in short supply, particularly masons, designs are also being shaped by workforce realities.
“There are fewer masons, which means buildings are having less masonry than before,” Galbraith added. “This sometimes comes into conflict with what a municipality may want.”
Adapting to the new normal
“Death, taxes, and construction costs never going down,” quipped Chad Griswold, partner at Milwaukee-based RINKA.
In response, Griswold said teams are exploring more options for things like location, density and materials to make projects pencil out.
“We’re looking at more optionality than we used to on a project,” he said.
For residential projects in particular, simpler formats like garden-style apartments are seen as an attractive design style. With fewer trades involved and less complexity overall, they offer a lower cost per unit to build, according to Griswold.
Across the industry, architects said they’re working more closely with construction partners earlier in the process to allow for better budget planning and more accurate cost estimation.
Balancing design intent with budget constraints remains a challenge.
“The dreaded word in the industry is value engineering,” Griswold said. “You have a project and everybody likes it, likes the quality, likes the look of it. Then, they get the cost and then you go through all these exercises... and sometimes you don’t end up with the same product or design in the end.”
To avoid that pitfall, RINKA has shifted to an “additive” model. Instead of starting with a fully developed design and cutting back, the firm builds from a baseline and adds features strategically. It’s a method that Griswold said helps protect both vision and value.
While budget conversations have always been part of the process, they’ve become more intense lately.
“In the past, it was maybe a little bit easier to understand what that pro forma cost is, design something, and you’re going to be within shooting distance of getting it done,” Griswold said. “These days, it’s gotten harder to achieve.”
Still, Griswold believes these constraints can fuel innovation.
“The more constraints that are put on a project, the more creative we have to be to achieve a design that’s not only functional, but beautiful and something that everybody is proud to have in their community,” Griswold said. “Sometimes it actually produces better work.”
