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Disney makes construction dreams come true – kinda

Disney turned New York City into a Magic Kingdom with its multi-billion dollar campus development propping up an otherwise nightmarish construction sector during the COVID shutdown.

New numbers from Dodge Data & Analytics show that the entertainment giant’s $760 million headquarters project in Hudson Square (pictured top) – along with Brookfield’s Two Manhattan West – help dent the impact of the non-essential construction building shutdown.

During the first half of 2020, commercial and multifamily starts in New York NY fell 24 percent to $11.5 billion relative to the first six months of 2019.

Commercial starts were 18 percent lower, a relatively sanguine decline given the almost two-month ban on nonessential construction in the city.

However, without Two Manhattan West and the Disney building, the numbers would have showed a 50 percent decline in commercial starts during the first half of the year.

Multifamily starts dropped 29 percent in the first six months of the year.

The largest multifamily projects to get underway were the $420 million Hunter’s Point South mixed-use project in Long Island City (below) and the $260 million 451 10th Ave. apartment building.

Elsewhere, the Dodge report show that for the first three months of 2020, U.S. multifamily and commercial building starts inched up one percent from the same period of 2019. The commercial and multifamily group is comprised of office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing. 

The full force of the pandemic bore down on U.S. construction starts in April as economic activity virtually shut down and local restrictions on construction took effect. Construction resumed in some areas in May allowing starts to post a mild gain over the month. Advances continued in June. However, the damage to commercial and multifamily construction during the first half of the year was palpable. Starts plunged 22% below the first half of 2019, with only warehouse construction posting a very small gain. Commercial and multifamily construction starts in the top 20 metropolitan areas posted a similar drop of 22% through the first six months of 2020.

In the top 10 metro areas, commercial and multifamily starts slid 21% and only one metro area posted an increase. The New York metro area held on to its top spot, despite falling 24% below year-ago levels to $11.5 billion. Washington DC held to second place even though commercial and multifamily construction starts fell 42% to $4.2 billion. The Dallas TX metro area rounded out the top three, with commercial and multifamily activity dropping just 2% to $3.8 billion. The remaining markets in the top 10 were Los Angeles CA (-18% to $3.3 billion), Chicago IL (-9% to $3.0 billion), Boston MA (-31% to $3.0 billion), Miami FL (-16% to $2.8 billion), Phoenix AZ (+82% to $2.8 billion), Austin TX (-12% to $2.4 billion), and Houston TX (-38% to $2.4 billion).

Brookfield’s Manhattan West development

Among the second-tier (ranked 11-20) metro areas, commercial and multifamily starts plummeted 25% with just one metro area posting an increase. The second tier metros include Atlanta GA (-32% to $2.4 billion), Philadelphia PA (-25% to $2.1 billion), Seattle WA (-26% to $1.6 billion), Orlando FL (-28% to $1.3 billion), Nashville TN (-45% to $1.3 billion), Portland OR (-33% to $1.1 billion), Denver CO (-15% to $1.1 billion), Kansas City MO (-20% to $1.1 billion), Tampa FL (-19% to $941 million), and Detroit MI (+96% to $929 million).

“The COVID-19 pandemic and recession have devastated most local construction markets,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “Across the board, building projects have been halted or delayed with virtually no sector immune from damage. Construction starts have begun to increase from their April lows and there is cautious optimism that as the year progresses construction markets around the country will begin a modest recovery. However, the recent acceleration of COVID-19 cases in the South and West as well as the upcoming expiration of expanded unemployment insurance benefits (from the CARES Act) puts the recovery at significant risk and could undermine the construction sector’s ability to grow.”

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