New York City is well-known for a lot of different things like Times Square, Broadway, and world class museums. One thing that it is not well known for is affordability. A new study by Turner and Townsend as part of the 2018 International Construction Market Survey has shown that New York City is the most expensive city for construction.
The cost of building in New York City is $362 per square feet which is an 3.5% increase over the prior year. In 2018, Turner and Townsend is anticipating a further increase in the cost of construction by approximately 3.5%.
There are many different factors for the high cost of construction in New York City. The high price of land and the lack of raw or unbuilt space is one of the primary causes of high construction costs. However, a complicated regulatory process and concerns and processes over integrating with an outdated subway and rail system, as well as other utility integrations also further complicates the construction process and adds to the cost of building. New York City also has powerful unions that add another tier of cost to the construction process.
Second to New York City’s cost per square feet is San Francisco which has a cost of $347 per square foot. Hong Kong, in China, is third on the list with a cost of $344 per square foot. All three locations on the top of the list have a similarity in that they have a limited amount of space and are large and established cities with high costs for land and a multitude of skyscrapers.
John Robbins of Turner and Townsend also cited a lack of skilled laborers as a cause for the high cost of building. Overall, the construction industry decreased by 12% from the prior year and the industry is finding it challenging to obtain top talent. Robbins cited a need to attract talent back to the industry which may lead to a lower cost structure for construction going forward.