In San Jose, construction cost ranges for commercial and multifamily projects during 2024–2025 remain elevated due to persistent material price volatility, labor constraints, and regulatory complexity. Contractors and construction managers should anticipate broad cost bands that reflect market fluctuations and project-specific variables. These ranges serve as planning benchmarks and should be refined through detailed cost modeling in project-specific spokes.
Compensation costs in the San Jose metro area have moderated through 2025. Annual increases in total compensation dropped from approximately 6.3% in December 2024 to around 3.7% by September 2025, with wages and salaries following a similar trend. This signals a cooling labor market, though rates remain above national averages. Trade labor, journeyman, and subcontractor rates continue to reflect tight skilled labor supply and regional cost pressures.
Equipment rental rates in California rose by 5–8% in 2025, with specialty equipment such as large excavators, cranes, and aerial lifts seeing increases of 10–12% in tight markets. Contractors should secure current rental quotes for accurate budgeting and avoid relying on outdated estimates.
San Jose is experiencing a slowdown in multifamily housing permits, with a 41% drop in permits issued from January to July 2025 compared to the same period in 2024. This decline is driven by labor shortages, rising material costs, local opposition, and permitting complexity. Meanwhile, rent prices continue to climb, reflecting constrained supply and sustained demand. These dynamics underscore the importance of efficient project delivery and proactive cost management.
