New York's World-Leading Construction Costs Went Up Again
New York City remains the most expensive place to build in the country, with vast amounts of luxury residential, prime office and infrastructure development forcing up costs.
Construction costs in the city increased around 5% between 2017 and 2018, according to the New York Building Congress' latest report. Costs in the sector have been going up every year since 2010.
“New York’s building industry is faced with particularly high costs of land and materials and continued burdensome regulations,” NYBC CEO Carlo Scissura said. “These factors were the primary drivers of cost increases in 2018. While the cost of construction is high, the rewards for doing business in New York have never been greater.”
Material costs are also a key cause of the rise. Across the country last year, diesel fuel costs jumped 52%, lumber went up 23%, copper pipe was up 14% and structural steel went up 9%, the report states, citing the Bureau of Labor Statistics.
Overall, building offices in New York City cost an average of $575 per SF last year, according to Rider Levett Bucknall, compared to London at $468 per SF and Washington, D.C., at $425 per SF.
Building retail in New York costs $425 per SF in the city (compared to London at $600 per SF and D.C at $275), and hotel construction was an average of $600 (London is $456 and D.C is $525).
New York City multifamily construction costs were cheaper than in London — $375 per SF compared to $534 per SF — but ahead of D.C, which came in $300 per SF. Hospital construction cost an average of $700 per SF in New York City and D.C was at $650 per SF.
The NYBC found that the cost of building office space in New York City could be as much as $300 per SF more expensive than building in cities in Asia and the Middle East. Overall, the cost of building Class-A office space in New York is between 15% and 50% higher than in other major American cities.
The construction industry has lagged behind in investment in technology and innovation, but members of the industry say that is now starting to change. With costs high and margins tightening, technological advantages are now seen as the best way to improve profit.