NYC's Luxury Condos Help Push Construction Spending Back to Boom Times
Luxury residential tower construction is helping to push New York City construction spending levels near those accrued during industry’s 2007 and 2008 heydays, according to a new study.
The city’s 2014 residential-sector spending alone is expected to reach $10.9 billion—nearly a third of the $32.9 billion total forecast for the year, according to the latest New York Building Congress (NYBC) forecast. If residential spending reaches that amount, it will be up about 60% from 2013.
But the number of new dwelling units produced is expected to rise just 22% to 22,500 this year, increasing to only 23,250 in 2015, the study shows. By comparison, industry produced 33,200 housing units in 2008 with a construction spending price tag of only $5.9 billion, says NYBC in its New York City Construction Outlook 2014-2016 report.
“Such a wide disparity between spending and production is partially explained by a wave of so-called ultra-luxury condominium towers that are being planned and built in Manhattan,” Frank J. Sciame, New York Building Foundation (NYBF) chairman, said in a recent statement on the report. “While any and all new housing stock is certainly welcome, the key to the city’s future success will rest in part on our ability to produce a wide range of housing at multiple price points throughout the five boroughs.”
Mega NYC projects that broke ground this year include the first phase of the $1-billion, five-acre Flushing Commons residential mixed-use development project in Queens.
While the city’s 2014 total construction spend is up 17% over 2013, when adjusted for inflation it falls about 17% below the 2007 peak in terms of volume of work delivered. In 2015, is it expected to drop about 13% below that peak activity, NYBC says.
A continued strengthening in the commercial and government sectors is also contributing to total industry activity, NYBC says. Government spending is expected to rise this year to $14.3 billion, from $13.4 billion in the prior year. Non-residential is set to dip slightly to $7.8 billion, from $8 billion in 2013.
On the employment front, NYBC forecast 123,000 construction jobs in the city this year, up from 120,900 in 2013. It expects 125,100 jobs in 2015 and 127,300 in 2016. If the latter holds true, 2016 would be the second highest level of industry employment in at least two decades, behind the 132,600 jobs in 2008.
NYBC prepares its annual outlook with help from economic consulting firm Urbanomics, and support from the NYBF.