Dive Brief:
- Turner & Townsend’s 2018 International Construction Market Survey has revealed that, once again, building in New York City was more expensive than anywhere else in the world during 2017 at an average of $362 per square foot. The city earned that distinction in Turner & Townsend's 2017 report as well.
- Construction costs in New York City, despite a 12% year-over-year decrease in overall 2017 spending, increased 3.5% from 2016, and prices are expected to rise another 3.5% this year. Turner & Townsend evaluated construction costs for several different property types when compiling the information for its report and found that high-rise office buildings in New York City cost $565 per square foot to build and that residential towers cost $302 per square foot. San Francisco had the second-highest construction costs, at an average of $347 per square foot.
- New York City's $98.30 per hour average construction wage was second only to the $104 per hour that workers in Zurich, Switzerland, earn, but Turner & Townsend cautioned that only higher union wages were used in the calculations, not private-sector rates, according to The Real Deal. The authors of the report said that the challenge ahead is to find ways to maximize productivity and keep costs in check as the pool of qualified labor continues to shrink.
Dive Insight:
Construction wages are starting to rise, a sure sign of a tight labor market. Contractors have come off their margins somewhat to see a construction-industry pay increase to $29.63 per hour, which is 10% higher than all other U.S. nonfarm industries. This rate, to the satisfaction of industry employers, has drawn in thousands of experienced workers. Some employers are even offering signing bonuses to skilled trade workers, a perk usually reserved for management or other office workers. Craft workers are getting bonuses of a few hundred dollars to $1,500, but a supervisor who can bring precious skilled workers along with him or her can earn up to $3,000.
The industry acknowledges that a long-term solution to the labor shortage has to include new blood, but this is hindered by at least two major obstacles. First, according to a National Association of Home Builders survey, a large percentage of young people just aren't that interested in a job that is physically taxing, regardless of the earning potential. Second, society still steers high school graduates toward traditional four-year degrees.
This has caused some in the industry to try to actively educate younger workers about the technology that is part of construction work these days, with the hope that this will make the building trades a more attractive career choice.
