New York City has once again been named as the most expensive location for construction projects the world over. As one of the global centers for prime real estate, this hardly comes as a shock.
Turner & Townsend’s International Construction Marketing Survey reports the average cost of building in New York City is now $362 per square foot. This latest amount is a 3.5 percent increase from the previous year and a similar increase is expected for the next year. The cost of building a high-rise office building in the city is among the highest for the area, at $565 per square foot. Residential buildings average $302 per square foot.
As costs to build rise, construction spending has actually dipped 12 percent since its record high in 2016. As the industry is spending less money to build, why does the expense of doing so go up year after year? It’s not the rising cost of materials or structural components, like those you’ll find on New York based fastener supplier Baco Enterprises’ website. One of the most costly factors for building in the region comes down to the human element of any structural project.
The skills gap is a frequently cited problem for many industries in America, and construction is no exception. While some people may blame the lacking appeal of the labor itself as a key reason for attracting new, younger workers—who are swarming cities for high paying tech jobs—the construction industry can provide individuals with a high paying career that’s clearly in demand.
The high hourly wage for construction workers is part of the reason building costs are so high. When looking at higher union wages within the industry, Turner & Townsend found that New York City construction workers earn an average of $98.30 an hour and are the second highest paid construction workers in the world—just behind construction workers in Zurich, Switzerland, who make an average of $104 per hour.
These wages are likely to rise as hiring pools continue to shrink, and that will make building in the region more expensive. While that’s favorable for workers who are well trained and experienced in the industry, the city is going to need to start drawing in new professionals.
Increased implementation of technology and vocational training initiatives may help attract more young people. There’s also the issue of making potential applicants less adverse to taking on a physically taxing job, even if it’s offering triple or quadruple the wages of a role in the service industry.
It may also be a matter of changing society’s attitude toward trade education compared to the pursuit of a traditional four-year college degree. As conventional white-collar positions are increasingly limited, automation disrupts more entry level jobs, and wages continue to stagnate, young people may finally start considering higher paying jobs working on office high-rises rather than within them.
Attracting new workers, through whatever method, is vital to securing the future of the industry and a city that needs reliable infrastructure resources.