It’s Official—New York Is Now The Most Expensive City In The World To Build
A new report shows that New York, San Francisco, Seattle and Houston are all in the top 10 most expensive cities for construction.
As if you didn’t already know, it’s expensive to build in New York City. Not just expensive but now officially the most expensive place in the world, according to the 2017 International Construction Market Survey by Turner & Townsend, which states that labor rates and the strength of the dollar have inflated Big Apple construction costs.
The put it in perspective, it costs around $354 per foot to build in New York. A big chunk of that is eaten up in labor — a staggering $100 an hour, putting construction workers pay in amongst that of lawyers and bankers. In the cheapest markets — Banglore, Bejing, Dar es Salaam, Warsaw and Nairobi, where the cost of labor is a fraction of that in the top five countries, construction costs are under a quarter of that in New York.
The new figures mean that New York has now replaced Zurich, Switzerland, as the world’s priciest construction market. Another U.S. city, San Francisco, is second with construction costs at $330 per foot, with Zurich now at third. Seattle and Houston also make the top ten with costs at $280 and $233/foot respectively.
New York developers aren’t due a respite either as the survey predicts continued price increases of 3.5 percent in 2017, on the heels of last year’s 3.7 percent growth, which caused construction spending in the Big Apple to hit a record $42 billion in 2016. It helps explain the astronomical projected costs for some of Manhattan’s high end buildings such as One Vanderbilt, due for completion in 2020 with a cost of $3 billion. Developers are banking on the cache of New York real estate to pull them through and keep sales prices high.
Carlo Scissura, president of the New York Building Congress echoed these sentiments, telling the NY Post. “New York is number one in everything,” he said. “You have the coolest, best buildings and it’s an expensive place but we know that. The quality and the reward of New York is not matched by anything in the world.”
Notable in the list is London, which in light of drop in the pound, post Brexit, dropped from third the fifth most expensive city to build, despite a five percent increase in costs. The report also predicted that Trump vaunted deregulation and infrastructure spending would keep the construction industry buoyant, despite the volatility which surrounds his presidency.
If ever there is was city known for rampant construction Dubai is it. It also has a sullied reputation for importing cheap labor from India and Pakistan to keep costs down. Recently though, Russian sanctions and Brexit have depressed Dubai’s construction sector. Costs are expected to increase there by 2020 as its projects are put out to bid with developers now expected to hire quality labor.
While construction costs have actually dropped in Perth Australia and risen massively, by 20 percent in Buenos Aires due to inflation, New York’s will continue to ascend in part because of the amount of new large scale developments such as Hudson Yards, taking to the skies and the tenants and owners willing to sign on the dotted line before completion.
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