Construction costs in New York City and throughout the region have declined in response to the softening economy, according to a report recently released by the New York Building Congress.
A Building Congress analysis of McGraw-Hill Construction’s F.W. Dodge data on new buildings, shows that hard construction costs which are defined as physical costs of construction such as materials and labor, for offices and banks have declined ten percent between 2008 and 2009, while apartment construction hard costs have declined nine percent over that period. The category of new buildings that includes schools and libraries has similarly dropped by eight percent.
According to Engineering-News Record’s Building Cost Index which uses local prices for Portland cement and lumber, the national price for structural steel as well as local union wages, plus fringes for carpenters, bricklayers and iron workers to derive BCI; construction costs in New York City have fallen slightly in three consecutive quarters since October 2008. From July 2008 through August of this year, the BCI has fallen 1.1 percent in the city.
A survey of the New York metropolitan region by Rider Levett Bucknall, a survey that examines much of the same data as ENR but also includes estimates of bid price changes, including overhead and profit which tend to decline during down periods; finds that construction costs in the area have declined approximately four percent since January 2009.
“It is encouraging to see prices moderating in response to the economic downturn,” said New York Building Congress President Richard T. Anderson.
The report adds that costs may fall even further. The Building Congress says contractor bids have been coming in well below project estimates.
“Larger institutions and government agencies stand to benefit to a much greater extent given their need and ability to continue building through all economic cycles,” said Anderson. “In fact, government should view such periods of lessened demand and decreasing costs as opportunities to get the most bang for the taxpayer buck.”