New York City construction spending
forecast to hit record: report
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[October 25, 2016]
By Herbert Lash
NEW YORK (Reuters) - Construction spending
in New York City is on track this year to surpass the record set just
before the financial crisis as an all-time high in city jobs drives
strong demand for new housing and office space, an industry association
said on Tuesday.
The New York Building Congress forecast construction spending this year
will reach $43.1 billion, a 26 percent increase from 2015 and the first
time the metric will have eclipsed the $40 billion mark in the city.
The association projected spending of $42.1 billion in 2017 and $42.3
billion the year after as the biggest building boom since the 1980s
changes the skyline in downtown Manhattan, its far West Side and in Long
Island City across the East River.
New York City employment has grown 18 percent since late 2009, the
strongest pace in decades, as seasonally adjusted nonfarm employment
rose to a record 4.3 million jobs in September, according to the state's
Department of Labor.
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Growth in private sector jobs increased 2.3 percent in the city, faster
than the U.S. average of 1.9 percent, as millennials seek to live, work
and play in urban environments.
On an inflation-adjusted basis, this year's projected spending on
residential and non-residential buildings is 47 percent greater than
2007, the previous peak when $31.1 billion was spent on city
construction, the association said.
However, after-inflation government spending on infrastructure is
expected to be 39 percent less than 2007, a sign the current boom is
being driven more by the private sector than the previous surge when
spending was split almost evenly.
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A full moon rises behind the Empire State Building in New York as a
man watches in a park along the Hudson River in Hoboken, New Jersey,
February 25, 2013. REUTERS/Gary Hershorn
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Almost a dozen marquee office buildings will be completed or be
under construction in Manhattan by 2018, including five towers in or
nearby the mammoth Hudson Yards project on the far West Side, 3
World Trade Center downtown and One Vanderbilt adjacent to Grand
Central Terminal in Midtown.
Global capital is increasingly looking to New York real estate for
investment returns, which poses a double-edged sword, said Jesse M.
Keenan, a faculty member at the Graduate School of Design at Harvard
University.
While softening the economic cycle's downside, the capital flowing
to New York also forces domestic returns lower.
It remains to be seen whether this money can diversify asset classes
to repair decaying infrastructure, house the elderly and poor, or
prevent the exodus of highly productive mid-career workers who
cannot afford to raise families in the city, he said.
(Reporting by Herbert Lash; Editing by Lisa Shumaker)
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