If it Cost Less to Make Why Doesn't it Cost Less to Buy?
A comparison of two virtually identical buildings, their cost to build, and how much renters are being asked to pay for each.
A rendering of the three-building complex in Long Island City known as Jackson Park. Two of these high-rise residential/commercial structures were built by non-union work crews, and one was built by New York City unions. — Mack Scogin Merrill Elam Architects and Hill West Architects
If a product costs less to make, you should pay less for it. That’s reasonable. So how would you feel about paying a Cadillac price for a Kia? No offense to Kias, they’re good vehicles, but they’re not Cadillacs.
It’s safe to say that you’d be outraged. Yet that overpay scenario may be happening every day to purchasers of high-rise real estate in New York City. Because more developers are choosing non-union contractors to erect tall buildings instead of union shops. The accepted reasoning behind their choice is that non-unions are cheaper to hire than unions, (it is also argued that non-union work is not up to the standard of union work, but that’s a different subject).
Without getting into the shady ways that some non-union shops make their bids cheaper (some rely on wage theft, insurance and tax fraud, skimping on safety regulations as their key price-cutting tools), for the sake of the argument herein, let’s accept that non-unions are cheaper than unions by 20 – 30%, which would amount to millions of dollars in savings on the construction of a residential high rise in New York City.
Wouldn’t that mean that, all other things being equal, a building constructed by non-unions would be more affordable to the renter or buyer than a building put up by more expensive unions? If the developer spends millions less to build it, you should pay less to rent it.
Well, consider as one telling example the new complex in Long Island City where three gleaming mixed-use high-rises, known as Jackson Park, stand at the junction of Queens Boulevard and Jackson Avenue.
The entire complex is the work of one developer. To create the super-structure for the 53-story residential tower known as 3 Jackson Park, that developer hired the non-union cement contractor Rovini Concrete Corporation (Rovini is a contractor with a troubling record). For the 44-story high-rise, 1 Jackson Park, they contracted the union builder Pinnacle Industries.
The apartments available in both these towers are extremely similar in access and views, size and amenities, fixtures and finishing. Another way they are extremely similar is the price to rent. For the below 1BR, 2BR and 3BR apartments, there is no significant difference in the published rental cost for the non-union-built apartments at 3 Jackson Park and the union-built homes at 1 Jackson Park.
Take a look.
If you’re not OK with that, then the best way to get the most for what you’re paying is to demand to see only union-built structures.
If you’re paying Cadillac prices anyway, might as well get the Cadillac.
In a side-by-side comparison of similar apartments in two virtually identical buildings reveals the rents are likewise virtually identical. This is true despite the assumption that 1 Jackson Park, built by unions, cost millions more to construct.
So, if the cost to rent is the same regardless of the cost to build, what happened to the millions saved on the construction of 3 Jackson Park? Might that bundle have gone into the pockets of the developers and contractors?
If that’s the case, and the cost benefit of cheaper labor does NOT make its way to you, the renter, maybe now you do want to consider how some non-union contractors lower their bids. Reminder: it’s through wage theft, insurance and tax fraud, skimping on safety regulations, and worse. And maybe you do want to decide if you’re OK picking up the tab for all of that. Because it is the renter who is unknowingly subsidizing some very bad behaviors. If you’re not OK with that, then the best way to get the most for what you’re paying is to demand to see only union-built structures.
If you’re paying Cadillac prices anyway, might as well get the Cadillac.
Sources
The Leaning Tower of Pizzarotti
See Also
NYC Construction Site Deaths
