New York construction spending to top record
This is driven by surge in development of offices, residentials
NEW YORK: New York City construction spending is expected to climb 26% this year to a record, driven by a surge in development of offices and residential properties, according to a local trade organisation.
The New York Building Congress estimates spending will reach US$43.1 bil, topping US$40bil for the first time and surpassing the peak in 2007 on an inflation-adjusted basis. Private-sector investment is outpacing government spending, whereas the split was more even in the last boom, the group said in a report.
Investors are reshaping New York’s skyline with new office and residential buildings to capitalise on demand for state-of-the-art properties.
Last week, SL Green Realty Corp broke ground on 1 Vanderbilt, a 1.7 million-sq-ft skyscraper next to Grand Central Terminal, with an expectation of attracting some of the highest office rents in the market. Luxury condominium and rental towers have proliferated, creating a pile-up of high-end homes.
“The residential construction sector remains in the midst of an epic run,” the Building Congress wrote.
“Office construction has been the primary driver of the recent surge of non-residential construction,” which also includes hotels, sports and entertainment venues, and government buildings.
Construction has soared from a recent low of about US$27 bil just five years ago. It’s up from US$31.1 bil in the 2007 peak, which translates to US$41.6 bil in 2016 dollars, according to the Building Congress, a trade group for the construction and real estate industries.
The city’s construction jobs are likely to reach 147,100 this year, surpassing 140,000 for the first time in more than two decades of record-keeping, the group said. It’s the fifth straight year building employment has increased.
Spending on non-residential building construction will probably hit US$17 bil, a 27% jump from the US$13.4 bil spent in 2015. Office construction is at its highest level in more than a quarter-century, Building Congress chairman Richard Cavallaro said in a statement.
About 11.6 million sq ft of offices are under construction in Manhattan alone, with much of the building concentrated downtown and in the Hudson Yards area on the far west side, and millions more are being added in Brooklyn and Queens.
Residential construction should break a record for the third straight year, hitting US$13.4 bil, up from last year’s US$12.7 bil and US$12 bil in 2014. Housing construction back in 2010 was just US$2.6 bil, according to the report.
“The big question is whether this pace can be sustained once all the projects currently in the pipeline have been completed,” Richard Anderson, president of the Building Congress, said in the statement. — Bloomberg