Friday, August 15, 2014

City Construction Spending is Booming, Jobs Up From 2013

Construction spending in New York City is booming, with the total dollars poured into development expected to reach $31.5 billion in 2014, according to a report by the New York Building Congress. The boom will yield fewer new units as more money is spent on super-luxury projects. The report also anticipates the number of construction jobs will reach 122,700 this year, which is up slightly from 2013 but still well below the 2008 peak of 132,600 jobs.
The numbers seem contrary to the number of new construction permits issued, but in fact developers are simply spending more money to build fewer units, underscoring the challenge faced by the mayor in creating affordable apartments in Manhattan, as well as less costly ones in Queens and Brooklyn.

The Building Congress, which promotes the construction industry, estimates that while residential construction spending will reach a new record high of $10.2 billion in 2014, only about 20,000 new units will be created.

That is a 9% increase from the number of units created in 2013 but still significantly below the more than 30,000 units that were constructed annually between 2005 and 2008.

But regardless, the current boom in residential construction has created thousands of new construction industry jobs and increased economic activity and tax revenues. In fact, the Building Congress report predicts that the residential sector will single-handedly lift total construction spending across all sectors by 10% this year over last year's level.

In contrast, spending on non-residential buildings, which includes commercial office towers, is expected to dip slightly from last year's $8 billion figure.

One area of concern, however, is the relative lack of new housing that is being created by virtue of all this residential spending.

Experts point to the high cost of land, which makes it difficult to build anything other than luxury condos. Rezoning has also made it difficult to build in some parts of the city where land might be cheaper.

Developers also face significant challenges navigating the city’s bureaucracy. Mayor Bill de Blasio has also pledged to make the Department of Buildings easier to navigate for smaller developers in the outer-boroughs.

While the luxury residential market is booming in Manhattan and in parts of Brooklyn and Queens, the city has its work cut out for achieving Mayor de Blasio’s plan to create or preserve 200,000 units of affordable housing over the next decade.

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