Construction Cost Trends in New York City
The cost of construction in New York City has increased more than 400% over more than 40 years. This improvement in the cost of construction proves that the city has outpaced all the other major cities in U.S. Acceleration in the cost curve has been noted as the general contractors have reported an increase of about 5 to 6% in the New York City. And this rapid escalation is creating a hindrance in the city’s cost competitiveness against other cities in U.S. Besides it is also widening the cost breach.
On a comparative basis the cost of construction in New York is more than 60% than the construction in Dallas, about 50% more than Atlanta, 25% more than Seattle and about 20% more than Los Angeles. Though the same global as well as national trends in construction costs are practiced all over U.S, it is New York that has experienced the maximum increase in hard and soft costs. It is probably because of its unique environment and cost factors.
It is notable that land costs have accelerated significantly in comparison to all the other cost factors. The high returns and rents in the luxury condominium and office markets of New York City have led to the hike in the land costs. It is also to be mentioned that the costs of environmental mitigation and limited availability of sites are also responsible for the high land prices. The escalating cost of lands is also an outcome of the constraints imposed by public processes and regulations that include zoning codes and site and design approval.
Inadequate project planning and inefficient management in public sector can also cause increased costs. Increased cost can be contributed by various project management issues such as changes to scoping and specifications, inadequate budget accountability, lack of clarity of scoping documents and drawings, and delays in making decision. If owners aiming for high design constructions, lack the capability to handle design process, value engineer and control costs on complex projects, are bound to face great risk of high costs.