Building in Philly: Cheaper than New York, but not cheaper enough?

By: Joseph N. DiStefano
Posted: Thursday, September 19, 2013

Peter Angelides joined the Urban Land Institute and other experts in a forum to compare building costs in the city of Philadelphia vs. elsewhere.

Their conclusions, according to Angelides, who is putting a report together:

  • Compared to Philadelphia, New York building costs are 15 to 20 percent more expensive.
  • Boston, Chicago and other big cities are slightly more expensive than Philly.
  • Other places are 10 or 20 percent less expensive
  • Posted labor costs are higher in New York than Philadelphia
  • Skilled labor costs (Electricians, Ironworkers, Steamfitters, Operating Engineers) are similar for union and nonunion workers; union benefits cost a little more
  • Unskilled or semiskilled labor costs (Laborers, Carpenters) are higher on all-union jobs, partly becaues those unions’ work rules require more people on the job than non-union contractors typically use. (That’s why big projects in places like Delaware used mixed shops: you’ll see non-union Latin American immigrant labor and unionized U.S. skilled workers on the same job sites.)
  • Building in Philadelphia is difficult because the small lots make it tough to store materials and set up staging areas onsite or near the site. This is pushing more builders to pre-fab elements at suburban locations, which reduces the city workforce and wage tax collections.
  • Lenders charge higher interest and fees, or require more equity (cash up front), on Philadelphia jobs than in New York or Washington because the lower rents would otherwise make for higher financial risk or lower profits.
  • So Philadelphia construction typically requires government subsidies, which are currently hard to come by.

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