“Market fundamentals such as occupancies and rents continue to show improvement, which supports further growth for commercial and multifamily construction,” Robert A. Murray, chief economist for Dodge Data & Analytics, said.
Murray noted that while the overall economy in the New York region remains tepid, with 2.3% GDP growth in the second quarter, “commercial and multi-family development continues to be a prime focus of the investment community in its search for yield.”
He noted, however, that construction starts for commercial building is still well below the peak volume of the previous decade, even with double-digit gains over the past four years.
Meanwhile multi-family housing has shown steady growth since 2010, which has generated some concern about overbuilding, particularly in the New York City metropolitan area, Murray said. Nonetheless, “New York City is seeing an even greater amount of multifamily construction starts this year, and the national multi-family upturn is now broadening in terms of geography, with construction gains taking place in more metropolitan areas,” Murray said.
The $17.3 billion of first-half project starts in the New York region was substantially greater than the starts reported in other metropolitan areas. Miami ranked number two at $3.0 billion and up 38% from a year ago.
Starts were down 15% from a year earlier in Washington, D.C., with $2.4 billion, up 21% in Boston with $2.2 billion, and up 49% in Seattle, which registered $2.1 billion in starts, according to the Dodge data.