Real estate in New York City is a multi-billion dollar business. With so many buildings and such a high population in a relatively small area, each square foot of construction becomes very valuable. NYC is currently the most expensive place for construction in the world, and a key challenge is addressing the shortage of affordable housing.
NYC is characterized by its stringent building codes, especially the requirements dealing with fire protection systems. However, this is justified given the high concentration of buildings and persons: if there is an accident due to poor engineering practice, there is a high likelihood of collateral damage.
As of May 2018, Manhattan alone has around 24 million square feet of office space and nearly 5,000 residential dwellings under construction. There is a common perception that NYC has run out of space, but there are still 16.5 acres of vacant land that can be developed.
Optimize the cost of your building systems with smart design.
How Much Does Construction Cost in NYC?
According to the Turner & Townsend’s 2018 International Construction Market Survey, the average construction cost in NYC was $362 per square foot in 2017, considering all building categories. This makes NYC the most expensive place for construction in the world, followed by San Francisco at $347/sf, and Hong Kong at $344/sf.
Office and high-rise multifamily buildings are the two most common types in NYC, and their respective construction costs are the following:
- Office: $565/sf
- High-rise multifamily: $302/sf
NYC construction costs increased by 3.5% between 2016 and 2017, and the same increase is expected by the end of 2018. However, overall construction spending decreased by 12% between 2016 and 2017.
Main Challenges: Expensive Materials and Labor Shortage
The rising cost of steel has a significant impact on the NYC construction industry. For example, structural steel beams have been priced above $2,300 per ton, which adds over $230,000 to project costs for every 100 tons used.
To reduce steel costs, many real estate developers are switching to concrete: steel has been the preferred material for skyscrapers due to its higher strength per pound, but concrete has become viable thanks to innovation in materials science. In addition to having a lower cost, concrete-based construction is faster and more flexible - design changes require much less engineering work than in steel constructions. An example of a concrete-based development in NYC is 55 Hudson Yards, from Related Companies.
Rising material costs are combined with a shortage of skilled labor in NYC, further adding to construction costs. Technical skills are in such a high demand and short supply, that many tradesmen are now earning around $100 per hour. Governments, businesses and trade unions can work together to attract more talent towards skilled trades, while adopting emerging technologies that increase productivity per worker.
Optimizing Your Project with High-Level Engineering Design
With the high construction costs in NYC, it is in your best interest to avoid or minimize changes to projects. Editing design documents is much cheaper and faster than modifying completed work in an actual building.
- Modular construction can reduce project man-hours with prefabricated components.
- Energy efficiency can help you reduce the required capacity and running cost of mechanical and electrical systems. On-site renewable generation can further reduce your energy bills.
- Water-saving fixtures reduce the plumbing system load and pump horsepower. Water conservation also leads to reduced pumping and heating expenses.
These are just some examples of how smart design can help you reduce both construction costs and long-term operating expenses. Good engineering design can be considered an investment: the cost of additional design features that boost performance is recovered many times during a building’s service life.