If it seems like there are fewer cranes on the skyline these days, it’s probably because fewer construction projects are rising.
Construction starts on commercial and multifamily buildings fell 27 percent year-over-year to $7.2 billion in the first half of 2017, according to data by Dodge Data & Analytics cited by the Commercial Observer.
That’s a 63-percent drop from the $19.3 billion worth of starts in the first six months of 2015.
“I think it would be an overstatement to say this market is in a recession,” said Robert Murray, Dodge’s top economist. “I think it is settling back from an exceptional pace [in 2015] to what would be considered a healthy one.”
The expiration of 421a in 2015, absorption levels for the current pipeline, high land prices and rising construction costs could all play a factor in the slowdown, experts said.
Time Equities founder Francis Greenburger said he expects a correction in land prices and construction costs as development slows. Sales at His 50 West Street condominium tower in Lower Manhattan have slowed since they launched two years ago, he said.
“I can tell you that I’m glad that I’m not opening [a sales office] on a new project today, because velocity is low,” he said. “Pricing isn’t way down, but the number of units trading is down, which certainly make us say, well it’s time to make sure that any new projects that one might undertake are timed in a way that this market, which clearly has slowed dramatically, will be coming back.” [CO] – Rich Bockmann