NYC Tops List of Most Expensive Cities for Construction

The Big Apple comes with a big price tag—at least as far as construction is concerned. New York City is currently the world’s most expensive city to build in, according to the latest International Construction Costs report published by design and consulting firm Arcadis.

The 2017 report details the relative cost of building in 44 of the world’s major cities across 13 building types, outlining significant product quality, supply chain and cost differential factors.

Hong Kong, Geneva, London and Macau round out the top five.

New York is the lone U.S. municipality in the 44-city global list. In addition to New York’s lack of real estate availability and high real estate prices, the difficulty in navigating through the “concrete jungle” is a major factor in costs.

This includes the need to develop custom equipment to install façade components, as well as the logistical hurdles of getting glass in and out of tight areas.

“Building in such a dense urban environment like NYC means expertly handling material storage, transport and staging which requires key cost decisions such as the option of renting space or facing a complex delivery schedule which is likely to include a lack of proper laydown space,” the report reads. Arcadis suggests modularized construction solutions may be a solution to contain costs and keep projects on track.

On the front end, the report says sourcing an adequate pool of qualified contractors to bid at the outset of a project can be challenging. “Contractors can selectively decide which projects to work on so there is a need for project owners to aggressively market projects so that they are attractive to increase bidding competition,” it reads.

“This can slow projects or even halt them completely, and it may be necessary to use alternative contractors with workers from outside the local area or sub-contractors, as top firms are often busy. The construction management procurement approach allows contractors to buy materials and thoughtfully manage their integration into the project (i.e. just-in-time release) to stay in front of the project and optimize productivity.”

New York City’s place at the top of the costliest construction cities list is likely to continue in the coming years as large-scale construction projects and international investors drive development. According to Arcadis, it is almost 50 percent more expensive in construction costs than the U.S. national average and more than 20 percent higher than other major cities such as Chicago, Los Angeles, Seattle and Boston.

San Francisco is the second most expensive city for hard construction costs, due to its cramped environment, the seismic requirements and contractor competition.

The full report can be found here.