CHICAGO — On the banks of the Chicago River, developers of an office tower plan to lift the steel and concrete into place with two cranes, rather than one. And the building's glass curtain walls will be assembled from big modular panels rather than pane by pane to help shave about six months off the construction schedule.

This is but one lap in a race against soaring costs in the construction industry.

Overall, commercial building material costs in the Chicago area have jumped 36 percent in the past two years, said Phillip Waier, principal engineer for R.S. Means, a division of New York-based Reed Business Information. The composite cost of materials such as steel, concrete and copper wiring jumped 16 percent in 2004, 8.7 percent last year and are projected to rise about 8 percent this year, he said.

To cope, developers and builders are employing tactics that include speeding up the pace of construction so they can more quickly move paying tenants into their buildings.

Conversely, some are canceling or delaying construction to redesign projects in an effort to cut costs. They may alter the size of buildings or substitute less-expensive materials such as synthetic stone for marble in lobbies, for example.

Inevitably, rents at some projects will rise.

Tenants who sign leases at the Chicago River development should expect to pay almost one-third more than last year's average rates when the building opens in February 2009, said Greg Van Schaack, senior vice president for the developer, Houston-based Hines Interests LP. "We won't chop quality," he said.

In other cases, industry experts say certain amenities will be sacrificed, or some less-expensive materials substituted, leaving some buyers or tenants getting less for their money than originally anticipated. Developers said that if necessary, they could cut costs by eliminating underground parking or installing lower-quality ventilation systems or slower elevators with less ornate cabs.

As the impact of rising commercial construction costs filters through the industry, it could be felt throughout the economy — most dramatically in squeezed landlord profits.

But it may also raise the cost of doing business across the country, decrease the amount of space firms lease and cut the number of jobs in construction and ancillary industries, said Jim Costello, senior strategist for Torto Wheaton Research, a division of CB Richard Ellis.

Construction isn't the biggest part of the economy, but such cuts could mean that consumer consumption takes a hit, he said.

Over the past year, prices of nonresidential construction materials have been rising at twice the rate of the finished goods measured by the producer price index: 8.3 percent compared with 4.9 percent. But price increases for some materials far outstrip that.

For instance, nationwide the price of gypsum products used for drywall is up 23 percent, plastic products like pipes are up 20 percent, steel-mill products 18 percent, aluminum-mill shapes 15 percent and concrete 11 percent, said Ken Simonson, chief economist for the Associated General Contractors of America, a trade group.

The 33 percent rise in crude-oil prices since 2005 affects materials like asphalt and synthetic rubber roofing as well as the cost to deliver materials, run machines and remove debris.

The radical spike in materials costs has many causes. The massive rebuilding required by last year's hurricane damage along the Gulf Coast, greater demand from the growing economies in Asia, and the nation's insufficient industrial infrastructure all play a role. U.S. makers of critically important steel products have not always pumped up production to meet rising demand.

"There hasn't been a supply side increase to match demand," said William M. Shook, an executive vice president at Bethesda, Md.-based Clark Construction Group LLC.

He said that explains, in part, why the price of a steel beam is now $675 a ton, up from $450 two years ago.

There also has been rationing imposed by U.S. drywall makers, Shook said. "Sometimes you can't buy what you want at any price," he said. "Drywall makers tell us how much they'll sell us, and it usually corresponds to how much business you gave them in the past. ... It's similar with cement."

Some developers are therefore pulling back on projects, hoping that rents will increase enough over time to more than offset increased materials costs.

"Until cost and income come together, some projects will be put on the shelf," said Steven Smith, a vice president at Leopardo Construction in Hoffman Estates, who monitors retail development.

Paul Laird, a vice president at Indianapolis-based Duke Realty Corp. who oversees Chicago construction projects, has delayed for six months construction on two suburban projects.

To compensate for the 5 percent increase in cost to build an office in Warrenville, Laird said, he increased the size and slightly modified the exterior of the building to reduce the per-square-foot cost about 2 1/2 percent. He also will wait to build a Romeoville warehouse distribution facility.

"We're getting pounded on the price increases," Laird said of a dozen projects he is planning for coming months. His firm is a $5 billion real-estate investment trust.

Every $1 increase in materials costs can lead to a $1.75 rise in a project's total development cost, estimates Rick Cavenaugh, president of Chicago-based Fifield Realty Corp. A more expensive building can mean higher costs for city permits, sales taxes, insurance and interest payments, Cavenaugh said.

Fifield has been reassessing projects. In July, it canceled a condo project in Fort Lauderdale, Fla. With slow city approvals and higher construction costs, he explained, "at this time, that market is no longer viable."

In Los Angeles, a luxury condominium project Cavenaugh is planning will cost about 40 percent more to develop than a similar one Fifield started two years ago and completed this month.