NYC, San Francisco among top 10 global cities with highest pandemic construction costs


Dive Brief:

  • New York City and San Francisco, according to the Arcadis 2021 International Construction Cost Index, are among the top 10 cities around the world with the highest construction costs. Arcadis compiled the report during the "second, stronger wave" of the COVID-19 pandemic.
  • The two U.S. cities were ranked No. 7 and No. 8 respectively, with Geneva rated the most expensive. Rounding out the top 10 list were London; Copenhagen, Denmark; Oslo, Norway; Zurich; Hong Kong; Dublin and Macao.
  • Despite the pandemic, Arcadis said, most markets covered by the report, including those in the U.S., remained stable and resilient, leaving them positioned for a recovery. The U.S., for example, experienced a "relatively mild" contraction of 2.4%. This means that many contractors will be able to take advantage of infrastructure and other building programs potentially funded by the $1.9 trillion American Rescue Plan Act.

Dive Insight:

Other U.S. cities on Arcadis' list were:

  • 16 - Boston
  • 20 - Philadelphia
  • 27 - Seattle
  • 31 - Chicago
  • 33 - Los Angeles
  • 36 - Washington, D.C.
  • 37 - Las Vegas
  • 51 - Detroit
  • 52 - Denver
  • 56 - Phoenix
  • 57 - Miami
  • 61 - Memphis
  • 62 - Dallas
  • 63 - Houston

At the time of the Arcadis report, the U.S. Federal Reserve committee predicted a growth of 4.2% for the country in 2021, and a slower pace of approximately 3% thereafter.

The strength with which the U.S. construction industry is entering the post-COVID recovery period differentiates itself even from the Great Recession as it is from a position of strength, Arcadis said. Construction output and employment at the beginning of 2020 were at their highest since 2008 and, thanks to a booming residential market, even managed to grow by 1% in the second quarter of 2020 from 2019.

Arcadis noted there are still some uncertainties, however. Segments of the commercial construction market are expected to shrink somewhat, and it is still unknown how much American Rescue Plan recipients will spend on infrastructure and other public construction projects. The high cost of construction materials and lack of skilled labor could also present challenges.

Arcadis suggested that the construction industry help to deliver the best value and meet project objectives by adopting a five point plan that includes:

  • Understanding the context of a project, prioritizing objectives and defining value.
  • Optimizing a solution that addresses all expected outcomes and balancing must-have and want-to-have elements.
  • Monitoring progress and measuring performance and success.
  • Reviewing supply chain capacity and choosing the right delivery method.
  • Detailing the project requirements and developing a business case.