Hello All,
Curious to what you guys are seeing for total development costs (PSF/GBA basis) on ground up multi development in NYC. Would be great if you had breakdown between hard and soft costs. Also, please specify product type (affordable, mixed use, fully market rate, market and affordable mix, luxury, etc.) and if your costs contemplate any union wage premiums due to 485x/421a/or some other city program.
Thanks in advance.
Based on the most helpful WSO content, here’s a breakdown of development costs for ground-up multifamily projects, which can help guide your analysis:
Hard Costs:
Soft Costs:
Tenant Improvements (TI):
Leasing Commissions (LC):
Additional Considerations:
If you’re looking for more specific numbers or further breakdowns, feel free to ask!
Sources: Multifamily Rent Per Square Foot vs. Rent Per Unit, What to look for in a Development Budget?, Q&A:New Real Estate Development Shop, https://www.wallstreetoasis.com/forum/real-estate/megafund-repe-modeling-test?customgpt=1, Modeling Tests - Free Sample
Bump
500/psf just hard costs prevailing wage.
Word of advice, don't develop in NYC, it's not worth it anymore with the rampant corruption.
Can you elaborate a little on this? at a cross roads between choosing development in sunbelt vs NYC as a student.
My guess is the above poster is a special little conservative snowflake who hates that most conservative areas are stagnant shit-holes and everyone wants to work in dynamic liberal urban metros.
NYC is a really tough development market. Not because it is particularly corrupt (it isn't) but because the building and entitlement processes are labyrinthine and expensive to navigate. The other guy is 100% correct that it's not a place to do your first deal without significant prior experience in the market, but that isn't because it is corrupt, it's because many years of increasingly layered bureaucracy and the needs of millions of diverse citizens and communities makes developing here a very tricky proposition.
Will provide some construction numbers as a direct reply. Just couldn't let this level of mendacity go unremarked and unrebutted.
Corruption by another name is still corruption.
As far as costs. You are looking at 150 - 400 pbf on the development rights. Then add in 75 - 125 per foot for soft costs and 500 - 800+ per foot for hard costs. So unless you are building for the 2000/foot+ sell out, you are looking at a world of pain.
Do note that pbf number I gave you doesn't factor in hold costs and demolition costs.
Corruption is a specific thing. The fact that it takes a long time to build something in NYC is not an example of "corruption". The fact that the Mayor pushed through certain projects so he could fly first class on Turkish Airlines is corruption.
I understand that you've long since passed the event horizon of being a rational observer, but this is kind of sad.
This is just wrong. On every level. First off, no one asked what the soft costs were. The thread is titled construction costs, not total development cost.
And sure, if you want to build market rate condos, it's gonna run you $800/sf. If you want to build pretty down the middle rentals, it's half that.
It's a shame to see you twist what must be a decent base of knowledge and experience to fit some political agenda.
Except this isn't corruption by another name. Do you know what corruption is, or do you just refer to anything you dislike as "corruption"?
And I'm not sure what the relevance of the rest of the post is. Even if it was accurate, and it's not, no one asked about total development cost. What was asked was construction cost, which means hard costs and debatably soft cost.
Yes, corruption is the use of government or other forms of pressure to steer or impact project costs or bidding to prefered outcomes or parties.
Are you going to actually sit here and tell me that the tens of thousands of construction regulations and requirements are not the result of intense industry lobbying and spending to impact the cost and or limit competition in the industry? Because if you honestly believe that you are more retarded than any of us imagined.
Do you really think that it should costs hundreds of thousands of dollars in permiting to build things? If you do, then you are a direct beneficiary of the corruption that exists in the construction industry in a place like NYC.
Actually, no, that isn't the definiton of "corruption" and it's not even close.
It's like saying that a 10 year old child drawing on construction paper and Related should be considered equally viable bidders. It's perfectly legitimate to have "preferred" bidders, it's the entire point of an RFQ, actually, you just need to have an above board reason. Like experience. Or the strength of a bidder's balance sheet. Moreover, as long as the reasons for preference are being openly stated and abided by, it doesn't rise to the level of corruption.
Well I cannot prove a negative. Do you have an example in mind? One single example among the "tens of thousands" of regulations and requirements which you can conclusively state has no purpose other than to limit competition?
I think there are plenty of laws and regulations, in this industry and in general, which have outlived their original usefulness or which serve to distort a market in a way the people who framed said law/regulation did not intend. That does not make it corrupt - it might mean some of the people are corrupt.
For example, the continuing push by the construction trades to mandate that any projects which receives City subsidy use prevailing wage is something I think is bad policy and being pursued by and for special interests. But it isn't corrupt. If you found a politician taking bribes in order to win their vote, that would be corrupt. But your definition of corruption is basically "anything I don't like is corrupt" and I'm neither as entitled nor as self-absorbed as you as to claim that I get to make those judgement calls.
I think it depends. It makes perfect sense to me that construction standards, and therefore the litany of rules and regulations which governs construction quality, would be more restrictive in a place like NYC than in rural West Virginia.
Do I think NYC has a labyrinthine and overly complex bureaucracy that stifles development? Yes. I said so earlier. As always with you, you make an awful point for some unknowable reason and then try to walk it back and end up at the same exact place that I start from.
Corruption is a specific thing. Words have meaning. The difference between us is that I don't forget that when it suits me to make a point.
Having prefered bidders based on project scale is one thing, having a predetermined list of who are "approved" is entirely different. In NYC there are dozens of project components that are easily done by just about anyone but are only permissible by a small selection of approved parties. These lists were created exclusively through lobbying and grift.
If you want to purposefully misunderstand an obviously general statement, that is on you. But everyone else isn't a vested pedantic sycophant.
Again, if you want to suggest an example, I'm happy to admit when I'm wrong. I don't know everything.
Sir, I gave YOU an out. You made a blanket statement. I made an attempt to interpret it in the most generous possible manner.
Cite an example. So far, you've made a totally unsubstantiated claim, provided zero evidence when challenged, and then accused me of deliberately misunderstanding. Which is dishonest in and of itself - how can I "misunderstand" an argument which you so clearly have refused to clarify?
You have made a positive statement. "In NYC there are dozens of project components that are easily done by just about anyone but are only permissible by a small selection of approved parties. These lists were created exclusively through lobbying and grift." Certainly you can provide a single example of this? After all, there are "dozens" of these lists, so providing one of them, and explaining how it was created "exclusively through lobbying and grift* [sic]" should be simple.
You conservatives - every accusation is a confession.
* You meant "graft" not "grift". Yes, I'm a pedant. As I said, words have meaning, and someone acting as dishonestly as you've done in this thread accusing me of being too focused on the meaning of a word is a compliment.
For what it's worth.....I agree with you. I hate when people want to play the word game, dance around by using words with more vowels but always come back to the same thesis of the point....
Ozy with all due respect (not that you deserve any), you claim to develop in NYC but don't even know Wildflower, not to mention you think 880 units at Willets point is $243mm (News flash, not even fucking close). www.wallstreetoasis.com/forum/real-estate/lihtc-pursuit-cost-reimbursem…
Let's call a spade a spade here, you DON'T develop in NYC. As someone who does, I can echo the OPs sentiment on corruption.
Don’t dismiss the soft costs!
The thread is about construction costs, not total development cost.
This is a fantastic breakdown from a recent NYC ground-up project. $4.25M all-in for 6-story, 17-unit project
https://x.com/aussieflya/status/1825244230857740753
Also highly recommend the day-by-day updates with photos and such https://x.com/aussieflya/status/1572119769192488962
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