CONSTRUCTION OUTLOOK UPDATE:
NEW YORK CITY
CONSTRUCTION COSTS
FEBRUARY 2019
New York City’s cost of construction increased at the same rate between 2018 and 2017, roughly five percent.
New York City remains the highest cost of construction market in the United States, according to a New York
Building Congress analysis of multiple cost indices.
“As New York’s population and economy
continue to grow, every sector of
the building industry – commercial,
residential, healthcare, education, cultural
and infrastructure – remains robust,
offering opportunity for both the labor
force and contractors. Furthermore,
New York’s building industry is faced
with particularly high costs of land and
materials and continued burdensome
regulations. 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.”
Carlo A. Scissura Esq.
President and CEO
New York Building Congress
NEW YORK CITY
CONSTRUCTION COSTS CONTINUE
TREND FROM 2017, INCREASE
ROUGHLY FIVE PERCENT IN 2018
NYC CONSTRUCTION COST cost increases have occurred in prime office buildings,
retail, hotels and multifamily residential buildings
New York City construction cost increased at the
over this period, while K-12 school construction costs
same rate in 2017 and 2018, roughly five percent on
been lower. Healthcare facility construction costs,
average. Construction costs in New York City have
which are historically the highest at $700 per square
risen continually since 2010.
foot in 2018, have risen less rapidly.
The disparity between New York and national cost
The Engineering News Record (ENR) Construction
trends reflects the booming New York construction
Cost Index for New York suggests that heavy
market which has placed high demand on labor
construction costs for work such as infrastructure are
and materials. New York City’s concentration of
running at a nearly six percent increase in 2018, down
construction in prime office and luxury multifamily
from nearly eight percent in 2017.
buildings, as well as public infrastructure work, also
explains why cost increases are higher locally than
Cost acceleration is especially prevalent in the office
nationally.
sector, due in part to a substantial increase in the
amount of work underway – including ground-up
Viewed from a historical perspective of the change in
construction, alterations and renovation of existing
building costs for different structure types between
office buildings and production of Class A office
2007 and 2018, it is evident that steep per-square-foot
spaces in Manhattan, Queens and Brooklyn.
NEW YORK CITY CONSTRUCTION COST INDICES, 2007-2018
BASE YEAR: 2007, INDEX 100
160
125
NYC CONSUMER PRICE INDEX
90
07
13
14
08
09
10
11
12
15
16
17
18
20
20
20
20
20
20
20
20
20
20
20
20
RLB Construction Cost ENR Construction Cost ENR Building Cost
3
NATIONAL CONSTRUCTION COST
AND MATERIAL COST
Considerable concurrence among major cost indices at the national level suggest that construction costs
increased in the United States by three to four percent in 2018, comparable to the national trends in 2017.
National construction costs, like New York City’s, have risen continually since 2010.
140
135
130
125
120
115
110
US CONSUMER PRICE INDEX
105
100
95
90
11
17
14
15
12
13
16
18
10
07
9
0
20
20
20
20
20
20
20
20
20
20
20
20
ENR CCI ENR BCI RIDER LEVETT BUCKNALL TURNER BUILDING COST INDEX
NATIONAL CONSTRUCTION COST INDICES, 2007-2018
BASE YEAR: 2007, INDEX=100
4
NATIONAL CONSTRUCTION COST
AND MATERIAL COST CONTINUED
Increases in material costs are major drivers of overall alone, the cost of diesel fuel increased 52 percent,
construction costs. The average change in prices lumber increased 23 percent, copper pipe increased 14
collected by the Bureau of Labor Statistics sheds light percent and structural steel increased nine percent.
on specific increases in material costs. Nationwide, These increases were either declining or stagnant
key material costs like fuel, lumber and steel have prices between 2011 and 2016.
risen since 2016 and more sharply since 2017. In 2018
200
186
172
US CONSUMER PRICE INDEX
158
144
130
116
102
88
74
60
11
17
14
12
13
15
16
18
10
07
9
0
20
20
20
20
20
20
20
20
20
20
20
20
COPPER PIPE LUMBER STRUCTURAL METAL CEMENT DIESEL FUEL
NATIONAL CONSTRUCTION COMMODITY COST INDICES, 2007-2018
BASE YEAR: 2007, INDEX=100
5
INTERNATIONAL CITY COMPARISON
NEW YORK
OFFICE CONSTRUCTION
LONDON
HONG KONG
SYDNEY
New York City is still the most SINGAPORE
expensive U.S. city in which to build. BEIJING
DUBAI
Compared to other major cities, New SHANGHAI
BERLIN
York’s construction costs for Class A $0 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600
office and retail rank highest, and the
average cost of construction ranks
above all other U.S. cities. However,
in key sectors such as multifamily NEW YORK
RETAIL CONSTRUCTION
residential, healthcare, K-12 education LONDON
HONG KONG
and hotel construction, major cities SYDNEY
SINGAPORE
across the U.S. either ranked higher or BEIJING
DUBAI
were consistent with New York City’s SHANGHAI
BERLIN
costs. $0 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600 $ 700 $ 800
For class-A office construction, New
York’s costs are between 15 and 50
percent higher than most other major
NEW YORK
HOTEL CONSTRUCTION
U.S. cities. Relative to other global LONDON
H HONG KONG
cities, priced on a comparable U.S. O
T
E
SYDNEY
L SINGAPORE
dollar exchange rate, New York City’s BEIJING
costs of constructing premium office DUBAI
SHANGHAI
space can be as much as $300 higher BERLIN
$0 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600
per square foot than cities in Asia
and the Middle East. In comparison,
New York’s premium office costs are
roughly comparable with London. MUTLI-FAMILY RESIDENTIAL
NEW YORK
CONSTRUCTION
continued on page 7... LONDON
HONG KONG
SYDNEY
SINGAPORE
BEIJING
DUBAI
SHANGHAI
BERLIN
$0 $ 100 $ 200 $ 300 $ 400 $ 500 $ 600
ABOVE, CENTER RIGHT
COMPARATIVE INTERNATIONAL CONSTRUCTION COSTS, 2018 - $/SQFT - (HIGH ESTIMATE)
SOURCE: RLB RIDER LEVETT BUCKNALL
6
NATIONAL CITY COMPARISON
OFFICE CONSTRUCTION
NEW YORK
WASHINGTON DC
BOSTON
CHICAGO
SAN FRANSISCO
LOS ANGELES
DENVER
$ 600 $ 300 $0
RETAIL CONSTRUCTION
NEW YORK
WASHINGTON DC
BOSTON
In terms of retail construction, the greatest
CHICAGO price differential currently exists in Berlin
SAN FRANSISCO and Dubai, where New York costs per square
LOS ANGELES foot are more than 250 percent higher. Much
DENVER depends, however, on the type of retail that’s
$ 500 $ 300 $0
being built – whether it is sting malls, big-
HOTEL CONSTRUCTION box or integrated into mix-use buildings like
NEW YORK in New York. New York’s costs currently
WASHINGTON DC
H appear to be lower than London’s and more
BOSTON O
T
E
L comparable to those in Los Angeles and Hong
CHICAGO
SAN FRANSISCO
Kong.
LOS ANGELES
DENVER With regard to hotel construction, less
$ 800 $ 300 $0 of a cost differential exists among global
cities. New York is less comparable to Asian
MUTLI-FAMILY RESIDENTIAL
cities like Shanghai and Beijing and more
CONSTRUCTION comparable with other major U.S. cities like
NEW YORK
WASHINGTON DC Chicago and San Francisco.
BOSTON
CHICAGO
SAN FRANSISCO
LOS ANGELES
DENVER
$ 500 $ 300 $0
K-12 EDUCATION CONSTRUCTION
NEW YORK
WASHINGTON DC
BOSTON
CHICAGO
SAN FRANSISCO
LOS ANGELES
DENVER
$ 500 $ 250 $0
ABOVE, CENTER LEFT
COMPARATIVE NATIONAL CONSTRUCTION COSTS, 2018 - $/SQF - (HIGH ESTIMATE)
7
SOURCES
The cost indices used by the Building Congress are cement priced locally and 1,088 board ft of 2x4 lumber
produced by ENR, Rider Levett Bucknall (RLB), priced locally. Compared to ENR Construction Cost
Turner, and the Bureau of Labor Statistics. Each index Index, the Building Cost Index is more applicable for
examines changes in costs of construction over time. structures.
Taken together or individually, these indices do not
capture all the factors influencing project costs. They Rider Levett Bucknall’s Comparative Cost Index
only offer a snapshot of general cost trends. tracks the ‘true’ bid cost of construction, which
includes, in addition to costs of labor and materials,
ENR Construction Cost Index measures how general contractor and sub-contractor overhead costs
much it costs to purchase the following hypothetical and fees (profit). The index also includes applicable
package of goods: 200 hours of common labor, sales/use taxes that ‘standard’ construction contracts
multiplied by the 20-city average rate for wages attract. Values of U.S. locations represent hard
and fringe benefits, 25 cwt of fabricated standard construction costs based on U.S. dollars per square
structural steel at the 20-city average price, 1.128 foot of gross floor area
tons of bulk Portland cement priced locally and 1,088
board ft of 2x4 lumber priced locally. Compared to Turner’s Construction Cost Index measures costs
the ENR Building Cost Index, the Construction Cost in the non-residential building construction market
Index is more applicable where labor costs are a high in the United States and is determined by several
proportion of total costs. factors considered on a nationwide basis, including
labor rates and productivity, material prices and the
ENR Building Cost Index measures how much it competitive condition of the marketplace.
costs to purchase the following hypothetical package
of goods: 68.38 hours of skilled labor, multiplied by U.S. Bureau of Labor Statistics’ Consumer Price
the 20-city wage- fringe average for three trades– Index (CPI) is a measure of the average change over
bricklayers, carpenters and structural ironworkers, time in the prices paid by urban consumers for a
25 cwt of fabricated standard structural steel at the market basket of consumer goods and services.
20-city average price, 1.128 tons of bulk Portland
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