Photo: Jorg Schubert/Flickr
New York City rose to the top of the list of the world’s most expensive cities to build in for the second year in a row. It was the only US city that made the list compiled by the global consulting and design firm Arcadis.
To compile the 2017 edition of its annual International Construction Costs report, Arcadis used a survey of construction costs on projects across 13 building types that the firm was a part of in 44 global cities. The building solutions used in each of the projects were “broadly similar” and construction costs were current as of the fourth quarter of 2016, the firm says.
New York City’s construction development is driven by large-scale projects and international investors, according to Arcadis. Construction costs in the city are almost 50 percent more than the US national average, and over 20 percent higher than other major US cities like Los Angeles and Boston.
And while there has been a global slowdown in the rate of growth in construction inflation, led by China and resource economies like Brazil, New York continues to see high levels of activity — and will likely continue to see similar levels beyond 2017 — and competition for contractors and labor, Arcadis observed.
Construction output growth in the US is expected to increase at about 3 percent per year. It is driven by the recovery of the housing market in large metro areas, and the continued investment in domestic manufacturing, says Arcadis. And while housing “remains a bright sector,” build rates are still 30 percent below pre-housing crisis peaks. This means there is still “potential for more growth.”
“New York rises to the top globally once again due to a lack of real estate availability, accessibility issues and high real estate prices,” said Arcadis Cost and Commercial Director David Hudd.
He added that in order to build in a cramped urban area like New York City, builders need to find smart choices to control the cost of building.
“Expertly handling storage, transport and staging of building materials, identifying skilled construction firms and labor far in advance, and implementing modularized construction,” Hudd said would all be necessary to tame high construction costs in New York City.
Other global cities that made the top 10 were Hong Kong, Geneva, London, Macau, Copenhagen, Stockholm, Frankfurt, Paris and Vienna.
Click here to read the entire report.