Quality construction materials are never cheap, but in some locations construction material costs will take a bigger bite out of your budget than you might expect. That’s even more likely if you’re planning on building in New York City.
Another Boom Means Growing Costs
The building boom New York City enjoyed before the economic collapse in 2008 saw construction costs rise by as much as 12 percent a year. Over the last few years, the city has entered another building boom. In 2015, there were 53 percent more construction starts than in 2014.
This rate of growth is having a similar effect on construction costs as the previous boom. While current prices aren’t quite as high as they were then, costs have risen by far more than the national average.
The New York City Building Congress reports construction costs have grown by around 5 percent in all parts of the city. That’s nearly double the national average rate of 2.5 to 3 percent increase.
Where the Money’s Going
Construction costs aren’t expected to rise as high as they did during the pre-2008 boom primarily due to labor costs. An increase in nonunion labor on New York City building projects means more workers are available at lower rates.
Construction material costs and other expenses may not rise evenly across all sectors. Although the residential sector is still flourishing, the high-end luxury residential market is cooling off somewhat. Costs are more likely to rise in the commercial and industrial sectors, which are set to grow over the next few years. Development and modernization of the city’s healthcare and educational facilities further fuels demand for construction work and the increasing costs. Government facilities, however, won’t have a major influence on the market.
Brooklyn, in particular, is benefiting from the boom. As the city’s third largest business district, it’s less developed than Midtown and Lower Manhattan. The fresh opportunities Brooklyn offers is attracting an increasing number of developers.
To learn more about where construction material costs could be headed, contact us at Construction Monitor.