In yesterday’s Third & Bond post, the folks from Hudson Companies laid out several scenarios for construction costs could be impacted in the coming months by the evaporating pipeline of development projects. While they expected to see the cost of materials fall somewhat and the quality of work go up, they predicted that “prices won’t go into a free-fall.” We heard an anecdote yesterday, however, that suggested otherwise: An architect told us that a contractor who had bid $1,750,000 for a job a few weeks ago just came back and lowered his bid by $150,000, or almost 10%. His logic? He’d rather give up his profit margin and be able to keep his team intact than not have enough work to keep his key people busy and fed. Are any readers in the midst of negotiating fees with general or sub contractors right now? What are you seeing?
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