This week, the Hudson Companies bloggers spill the beans on their projected construction costs.
Last week johnife reminded us of his question about the guaranteed maximum price (GMP) contract value and gross square footage of the development – in other words, he wants to know our construction costs per square foot. Yes, johnife, we are ready to share. But first we want to talk a little about construction costs in general, since it has been coming up a lot around the office, the job site, and in the media.
What do we expect to happen with construction prices now that construction starts are dropping considerably? There are a bunch of hypotheses out there:
1) As demand drops, subcontractors won’t get enough work to sustain themselves and will shut down. The result will be a smaller supply of subcontractors and thus prices will stay where they are or rebound after a short period of bidding wars.
More hypotheses and hard numbers below.