Nonresidential construction spending in New York City is projected to reach $39 billion in 2018, a nearly 66% increase over the previous year. However, spending is also expected to tail off significantly during the following two years, according to a new report, Construction Outlook 2018-2020, released today by the New York Building Congress.
Spending for all types construction in New York City is in its fifth year of growth and could hit a record $61.8 billion this year, 25% more than in 2017. That growth is attributable in part to several large-scale projects. The New York Building Congress forecasts that, despite some anticipated falloff over the next two years, total construction spending through 2020 will total $177 billion.
Nonresidential construction alone—which includes offices, institutional, government buildings, sports and entertainment, and hotels—is forecast to add a record 39 million gross sf this year, followed by 30.4 million sf and 23.4 million sf in 2019 and 2020, respectively. The projected decrease in construction spending for nonresidential buildings over the next two years can be pegged to the completion of several big projects by 2020, such as the 58-story 1,401-ft-tall One Vanderbilt, and three buildings within the $20 billion Hudson Yards redevelopment.
(All this new floor space is coming at a time when New York’s office vacancy rate hovers around 13%, according to the website Optimal Spaces.)
Residential construction spending—which in New York is primarily for multifamily buildings—will total $14 billion in 2018, up 6% from the previous year. Next year, residential construction spending is expected to hit $15 billion, and then recede to $10.6 billion in 2020. (The totals include renovations and alterations.)
Over the three years, 60,000 housing units and 107.2 million gross sf will be added, states the report. The average annual unit count, though, would be off from the 27,898 housing units added to the city in 2017.
The report states that construction employment will show growth for the seventh consecutive year in 2018, and top 150,000 jobs for the second consecutive year. While the Building Congress predicts an employment dip—to 145,600 in 2019 and to 147,700 in 2020—those numbers would still be higher than the average for the last five years.