The Future of Construction Costs?
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…
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?
Photo by deadrichmond
Actually, 56% of readers who responded to last year’s survey own a car. Or at least they did back then!
DOW8000SP800 80% of the Asshats here do not own a car.
The What
Someday this war is gonna end…
“Gas prices have not ‘plummeted’…”
I just bought gas for $2.50 at the BQE entrance near Flushing. I don’t pay much attention to gas prices ’cause I only drive on the weekends but that’s gotta be be a 40% hit. You’re not serious.
“Gas prices have not “plummeted”–they are still WAY above what they were a year ago.”
A Asshat with a Metro Card!
I don’t know what planet you are living on but construction costs are down. Contractors will work with you because the dynamics of the Mutant Asset Bubble has changed. Even Mexican are going back home. Real Estate is toast..
The What
Someday this war is gonna end…
Gas prices have not “plummeted”–they are still WAY above what they were a year ago.
“…there is a floor comprised of on-going obligations such as leased office space and equipment that at some point caps the reduction in management fees and material costs.”
Yeah, but that floor is sinking too. There’s only one economy.
Plummet? As far as GC’s go, downward movement in price ends when one or more of the competing entities (gc’s and/or their subs)is no longer solvent. While it is reasonable to expect operators to lower their margin expectations in order to stay in business there is a floor comprised of on-going obligations such as leased office space and equipment that at some point caps the reduction in management fees and material costs.
Contractors are quoting me higher prices than they did a few years ago, but not by that much, and the ones I use are still very busy.
I imagine it’s the expensive “Park Avenue” contractors like the one Brownstoner refers to who pretend as if 1.6 million is just enough to cover costs, who’ve had to lower their previously insane prices to merely very expensive.
For 1.6 million my contractors could gut renovate a twenty unit tenement building.
Common sense: Like the developments themselves, there’ll be a glut of available contractors and materials that will compete downwards in price. Construction/renovation costs will plummet.