A prominent U.S. financier and property investor has attributed the recent rise in property construction costs in New York City to the extra tariffs imposed by the federal government on the materials imported from China.
"We're seeing a lot of that. Included in that is the result of tariff increases and getting materials," said Marc E. Berson without specifying the cost rise.
Berson said the trade dispute with China, with ensuing tariffs on imports from China, is just one of the reasons that push up the costs of house building, but apparently the prime one.
"It's hard to identify it simply as a result of the trade war, but when you have the amount of activity that ties up construction workers and construction equipment as people are busier, they tend to increase their prices," said Berson, a well-known philanthropist, lawyer and entrepreneur with a focus on business and real estates.
U.S. commercial website Crain's New York Business once undertook a cost study of a completed 90-story building at the Hudson Yards Development Corp., in an effort to capture the impact on the construction industry from the tariffs against China imposed by the Trump administration.
"The building was completed prior to the introduction of tariffs. However, if it were being built now, the cost of the core and shell construction alone would have increased by 75 million to 100 million (U.S. dollars) because of tariffs on the steel structure, aluminum curtain wall and other building components," it said in "Tariffs are driving city construction costs even higher," which was published online in December.
Turner &Townsend's 2018 International Construction Market Survey has revealed that, once again, building in New York City was more expensive than anywhere else in the world during 2017.
The New York Times on Thursday quoted Jerome H. Powell, chairman of the Federal Reserve, and his colleagues as telling a Wednesday press briefing in Washington that "growth appeared to be slowing from last year, under the weight of the Trump administration's trade war (with China and some other countries)."
A study released by the U.S. Chamber of Commerce last Friday estimated that an escalation of U.S.-China bilateral tariffs will shave off 1 trillion dollars from the U.S. economy in a decade.
"Escalation of bilateral tariffs results in lower GDP, lower employment, lower investment, and lower trade flows for the United States," it added.
EXIT TO NEW JERSEY
Berson has been the chairman of The Fidelco Group since he founded it in 1981, which is a private investment owner-developer of residential, commercial, retail and industrial properties in New York, New Jersey, Florida and Ohio markets.
He noticed very clearly that the costs of imported raw materials are going up and consumers are paying the price for the trade disputes.
Such a change is even forcing developers to transfer to the neighboring state of New Jersey, where the overall payment is more controllable than in New York City, he added.
Aisha Glover from Newark Alliance echoed Berson's view, saying, "When you look at the city of Newark, just given our industrial heritage, given the proximity to the port, it is still our No. 1 demand if you will (agree)."
"Inquiries overall are up about 30 percent in the city within the last 18 months," she added.
Newark Alliance is a leading nonprofit organization dedicated to the ongoing economic revitalization of Newark, the most populous city in New Jersey, "striving to transform our city into a better and safer place to work, live, learn, play and do business," according to its website.