New York City's building boom will continue over the next few years, with construction spending reaching $127.5 billion by the end of 2018, according to the New York Building Congress' New York City Construction Outlook 2016–2018.
Construction spending — projected at $43.1 billion in 2016, $42.1 billion in 2017 and $42.3 billion in 2018 — will be stoked by continuing demand for office space and housing, the NYBC reported, and 2016 will be the first year spending exceeds $40 billion. Residential spending, including renovation work, is expected to hit $13.4 billion in 2016, five times what it was in 2010, while nonresidential construction is on pace to reach a 20-year high.
- Unlike the previous boom in 2007, growth through 2016 is not equal parts private and government investment. Adjusted for inflation, government infrastructure spending will be 39% lower than in 2007, leaving the private sector to drive the city's construction activity.
The NYBC expects total new units in the city to decrease steadily through 2018. A revival of the 421-a housing tax credit, or at the very least rezoning, is necessary to keep housing production at record levels, it said.
More than 11 million square feet of office space are anticipated for Manhattan from 2016 to 2018, spurred by marquee projects including the $25 billion Hudson Yards development. The first tower there opened to tenants in June fully leased, with a roster including Coach, L'Oreal USA, SAP AG, VaynerMedia and Boston Consulting Group. Looking ahead, the $3B One Vanderbilt mixed-use tower, which broke ground last week elsewhere in Manhattan, will offer 1.7 million square feet of office space when it opens in 2020.
The NYBC said state and government officials must make changes to current policy in order to meet these forecasts, including better capital planning and budgeting, dedicated revenue streams for infrastructure and increased leadership from the governor. The group also said the city must adopt alternative delivery methods like design-build, integrated project delivery and lean construction methods.
Nationally, construction spending fell 0.7% in August to an adjusted annual rate of $1.142 trillion, according to the most recent Commerce Department report. Multifamily construction spending rose 2.4%, but public construction, private nonresidential and the overall private residential category were down from July. Despite the month-over-month dip, year-to-date spending increased 4.9% compared to the same period in 2015.