Construction
Calculating the cost of The price of getting a building up in the notoriously expensive NYC market
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By Adam Pincus few years from now New York City’s skyline will look a lot different. New buildings will soar on the Far West Side, Long Island City will be even more filled out than it is today and the finishing touches will be put on highprofile residential buildings both Uptown and Downtown. This month, The Real Deal looked at the recordbreaking cost of constructing these buildings (see related story on page 40). Below is a look at what TRD excavated.
Where does the money go? A breakdown of what developers spend on a single project
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hen most real estate players talk about development projects, they refer to the bottom-line cost, whether it’s $300 million or $3 billion. But the White Plains-based construction analytics company IVI International, which acts as a consultant for developers, provided TRD with a deeper breakdown of how costs are actually distributed. The below breakdown is based on dozens of New York City projects that they’ve consulted on in 2014 so far.
The distribution of cOSTS on the average NYC building
The four big construction costs
The hard costs that developers can’t ignore
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slew of factors go into setting the price of construction materials and labor costs, from the state of the economy in China to the political environment for New York City unions. But the four big hard costs — concrete, carpentry, heating and cooling (aka HVAC) and electrical — remain at the top of every developer’s radar because they account for the biggest chunk of the materials budget. Below is a look at how much the “all-in” costs per square foot of the four biggies, including the labor, have increased in the last three years. The numbers are based on four buildings that IVI International reviewed in 2011 and 2014 — two Manhattan condos and two Manhattan rentals. TRD
Manhattan Condo Building 2014 (PPSF)
$90 $80
$75
$70 $60 $50 $40
$42 $33
$30
Construction manager fee Elevators
2011 (PPSF)
$92
$45
$42
$31
$29
$20 $10
Finishes
Concrete 3%
2%
9% Site work
Electric
2014 (PPSF)
42% Building shell
$90
2011 (PPSF)
$85
$80 $70
$68
$60
14% 15% Mechanical
$50 $40
Miscellaneous
HVAC
ManHattan Rental Building
6% 9% Electrical
Carpentry
$32
$30
$31
$26
$25
$24
$20
$19
$10 Concrete Source: IVI International
42 October 2014 www.TheRealDeal.com
Source: IVI International
Carpentry
HVAC
Electric