Already the third most expensive city to build in, New York City construction costs rose for a second consecutive year, according to two separate industry analysts’ reports cited by Crain’s. Rider Levett Bucknall measured a 2.13 percent increase in year-over-year costs, while the figure was 3.55 percent by Engineering News-Record’s count.
Those gains, while greater than the 1.94 percent recorded in 2010, actually match the national average, suggesting it’s the cost of material, and not labor, that’s powering the rising expense.
Construction labor negotiations staged this summer helped control some costs, although the Real Estate Board of New York was unsatisfied with the outcome, as costs, the board says, are still too high.
But the New York Building Congress said the local economy, and not construction costs, is the best predictor of future development.
“The most determining factors in development are not construction cost increases,” said New York Building Congress President Richard Anderson. “It’s the lack of job growth in the city that has historically been the major driver [for adding space].” Jobs in the New York City construction industry were hit hard, as 3,400 positions, or 3 percent of the total jobs, were cut, placing the city among the biggest losers in the nation.
Until demand stabilizes the outlook for the industry is bleak. Some experts fear firms may begin underbidding for the few projects available just to stay in business. [Crain’s]