For the second straight year, New York City received the dubious distinction of being the most expensive place in the world to build. After construction costs jumped 3.5 percent in 2017, the average price per square foot reached a new high of $362 in the five boroughs, according to a recent survey by Turner & Townsend.
6 Times more Costly than Bangalore
“It is intriguing to note that average construction costs in 2017 in New York City, the most expensive place to build, are more than six times those seen in Bangalore, the cheapest place to build,” the report stated.
San Francisco, which averaged a slightly lower $347 per square foot, was the second most expensive place to build. Hong Kong ranked third overall.
It is likely New York City will remain at or near the top for years to come. Another 3.5 percent hike in the cost of construction in NYC is expected in 2018. Globally, construction costs are projected to increase more than 4 percent this year.
New York City Construction Costs Continue to Rise
As New York City undergoes massive redevelopment, there is no sign of an end to this trend. The New York Building Congress estimates that construction spending will eclipse $42 billion this year. This growth will be mainly driven by large-scale projects, such as:
- Hudson Yards
- Grand Central
- La Guardia Airport
Non-residential and government-funded construction will likely be the major areas of growth in New York City going forward.
High-Rises the Priciest to Build
At an average of $565 per square foot, New York City high-rise office buildings were among the most expensive types of construction. However, the average construction costs of high-rise apartment buildings were more than $200 per square foot lower.
The high cost of construction can be attributed to increases in labor and material expenses. With construction wages steadily rising, contracting companies will now need to find new ways to increase profit margins.
The survey by Turner & Townsend and other research shows that despite high costs, New York City is experiencing high levels of economic growth, which will produce new projects and jobs for the foreseeable future.