Dive brief:
- Construction spending on projects in New York City will reach $83 billion by the end of 2023, a profit of about 13 billion dollars from last year and a 10% jump from pre-pandemic levels, according to a recent report from the New York Building Congress.
- This growth comes from an increase in manufacturing, institutional, commercial, hotel and office projects. Non-residential work will account for nearly 42% of total construction spending in 2023 and reach nearly $115 billion between 2023 and 2025. That’s up 32% from the pre-pandemic years of 2017 to 2019, according to the report.
- “While the commercial real estate development and construction industries in New York City face significant headwinds due to the economic climate, we remain optimistic about the long-term growth and success of our industry,” said Ralph Esposito, president of the New York building. Congress and president of the Northeast and Mid-Atlantic region at Suffolk Construction.
Diving knowledge:
Nonresidential construction continues to lead construction spending in New York City, Esposito said. Federal government investment in infrastructure, along with resilient sectors such as healthcare, life sciences, manufacturing, data centers and transportation, will continue to create opportunities, he said.
Spending within the category will reach about $34.9 billion by the end of the year, driven by heavy investment in government buildings, manufacturing, warehouses, life science laboratories, recreational facilities, hotels, retail and education.
For example, the New York Department of Education and the New York School Construction Authority announced in September a plan to allocate $19.4 billion in funding for school-related construction in New York City through 2024. This represents the largest funding plan ever for city schools, according to the NYCSCA.
Government spending in New York City will also increase in the near term, rising to $22 billion by the end of 2023. After that jump, however, NYBC predicts a decline to $21 billion in 2024 and $13.4 billion in 2025, largely due to uncertainty about future multi-year capital plans.
But despite strength in nonresidential construction spending, residential spending, on the other hand, saw a sharp decline in new home building permits in 2023, the report said. NYBC expects the number of new units in 2023 to drop from 30,000 units to 11,300 units.
However, NYBC anticipates that federal funding packages such as the Jobs and Infrastructure Investment Act and the CHIPS Act for eventually strengthen spending on New York City public projects. So far, only $11.7 billion of IIJA’s $1.2 trillion has been awarded to New York, according to the report.
Because of this, government spending on infrastructure development will likely dominate the construction market. The the city has already been identified more than $14 billion in state-of-repair needs, such as the Second Avenue subway extension and the first phase of the Gateway program.
