2009 Residential Permits Fall at “Alarming” Rate
The New York City Department of Buildings issued building permits for 576 residential units in 133 buildings citywide in January and February of 2009, 20 percent of the total reached for the same period in 2008, when permits were issued for 2,878 units in 344 buildings and 13 percent of the units that were permitted in January and February of 2007, when permits were issued for 4,476 units in 621 buildings throughout the five boroughs. This steep decline is partially explained by seasonal factors, regulatory changes and unique financial circumstances but the numbers also signal the end of a residential building boom in New York City.
“While the initial numbers for 2009 are alarming, it must be noted that this is a small sample size and the numbers can fluctuate considerably from month to month,” said the office of New York Building Congress President Richard T. Anderson. “The winter months are not traditionally the peak months for new permits, and we may still be feeling the effects of last year’s rush to accelerate projects prior to changes in the 421(a) tax incentive program. There also are signs that the credit squeeze is loosening, which could spur increased development in this low-interest rate environment.”
The Bronx and Queens were the most active boroughs for residential development to start the year with permits issued for 243 units in 56 buildings in Queens and 153 units in 32 buildings in The Bronx. Fifty-nine units were approved for construction in 28 separate buildings in Staten Island, where one to two-family homes predominate.
The biggest drop in potential housing starts were in Manhattan and Brooklyn with permits issued for 38 units in three Manhattan buildings in January and February compared to 1,220 units in 22 buildings in 2007 and 272 units in 9 buildings in 2008.
In Brooklyn, permits were issued for 83 units in 14 buildings in January and February compared to 1,309 units in 99 buildings in those same months last year and 886 units in 156 buildings in 2007.
These numbers could represent a significant geographic shift in residential construction given that Manhattan and Brooklyn ranked number one and two in annual residential building permits in all but one year since 2002.
“But even after taking these factors into account, the numbers do not bode well for the coming years,” said Anderson.
Annual construction could fall below 20,000 unites for the first time since 2002 if the current trends were to hold up. That would be more than a 40 percent drop from last year. And in a worst case scenario, numbers could drop as low as under 15,000 new units in 2009, a level that has not been seen since the mid-1990s.