New York City construction spending in 2020 is forecasted to exceed actual spending from eight of the past 10 years despite the impact of the COVID-19 pandemic on the local and national economy.
According to the New York Building Congress’ new report, Construction Outlook 2020-2022, construction spending is estimated to reach $55.5 billion in 2020. This would represent an 8.5 percent decline from 2019’s $60.6 billion in construction spending but would match 2017’s then-record-breaking amount.
Based on economic forecasting, construction industry spending is expected to reach $56.9 billion in 2021 and $56.1 billion in 2022. Total construction spending between 2020 and 2022 is expected to reach $168.5 billion.
“While New York City was one of the hardest-hit areas in the U.S. and is still reeling from the effects of COVID-19, the building industry is weathering the storm and remains the heartbeat of the city’s economy,” said Carlo A. Scissura, President & CEO of the New York Building Congress.
“This report evidences both the resiliency of the building industry and that investment in infrastructure creates jobs and boosts economic recovery. The Building Congress will continue working to ensure that this growth lasts for years to come.”
The Construction Outlook provides a three-year analysis and forecast of construction spending and employment in New York City,. Key points from the report include:
- Construction Employment Expected to Decrease in 2020: New York City construction employment is forecasted to drop to 128,200 in 2020, slightly below 2014 levels. Employment will bounce back in 2021 and 2022 to 136,650 and 140,200 jobs, respectively. Compared to the three-year period between 2017 and 2019, the forecasted years of 2020-2022 are expected to average 14 percent fewer jobs.
- Residential Construction Spending to Reach $17.8 Billion in 2020: The Building Congress anticipates $17.8 billion in residential construction spending this year, down from a peak of $19.7 billion in 2019. From 2020 to 2022, residential construction is expected to add 50,450 new housing units, with 20,450 units in 2020 and 15,000 units in each subsequent year. Compared to 2017-2019, the forecasted period will likely result in 33 percent fewer new housing units and a 14 percent drop in square feet of floorspace constructed.
- Non-Residential Construction Spending to Total $16.6 billion in 2020: Non-residential construction spending, which includes office space, institutional development, sports & entertainment venues and hotels, is expected to total $16.6 billion in 2020, down from $21.2 billion in 2019. Office construction, which traditionally accounts for half of non-residential spending, is predicted to increase in 2021 and decline in 2022. Spending will be driven by an increase in interior renovations and a decline in core and shell construction. The Building Congress also expects a portion of new office starts to be pushed past the forecasted timeframe into 2023 and 2024.
- * Metropolitan Transportation Authority (MTA) Spending to Increase: The Building Congress foresees construction spending by the MTA in the five boroughs to increase to $8.7 billion this year from $8 billion in 2019.
- *Port Authority Spending to Increase: The Port Authority of New York & New Jersey is expected to invest $3.5 billion this year in New York City capital projects, up from $2.1 billion in 2019.
*Final capital expenditures will be heavily dependent on the amount of federal aid allocated over the next year. This forecast assumes the MTA and Port Authority will attain all or a large portion of requested federal assistance.
The report also contains recommendations from the Building Congress, including the creation and implementation of a nationwide building plan on the scale of or greater than the New Deal, increasing diversity in the building industry’s hiring, development and leadership practices and the enactment of a citywide public space master plan.
Meanwhile, international construction cost surveyor and consultant Rider Levett Bucknall (RLB) just released it bi-annual Crane Index tracking the number of operating tower cranes in major cities across the U.S. and Canada.
With 12 cranes on the skyline, New York City has seen a 55 percent decrease in tower cranes located in midtown Manhattan since the previous count.
According to RLB, the construction pauses triggered by Covid-19 may play a role in that trend.
Most of the projects currently using cranes in the city are commercial office properties. However, with more people working from home in response to the pandemic, developers are hesitant to invest in building new office and retail space in the city. Hospitality work accounts for three cranes.