Fewer tax breaks and higher interest rates have throttled the construction of residential housing in New York City.
A report from the New York Building Congress forecasts that home production will fall 62 percent from last year’s level to 11,300 new units, making it the worst year for new housing construction since 2012, and ending a seven-year streak of more than 20,000 new homes created annually.
“Residential is troublesome,” said Carlo Scissura, the president and CEO of the Building Congress. “Government spending [on infrastructure] is now going to lead the way.”
The trade group hosted the borough presidents of Manhattan, Brooklyn and the Bronx on Wednesday to discuss the future of building, with a focus on infrastructure.
“I want to tear down FDR Drive south of Brooklyn Bridge,” said Manhattan borough president Mark Levine, who has also identified more than 170 potential residential construction sites.
“Many of our neighborhoods have not done their fair share when it comes to affordable housing,” Bronx president Vanessa Gibson said. “We are not accepting that Nimby approach when it comes to our neighborhood.”
Construction spending, of which real estate represents 74 percent, will rise this year by an inflation-adjusted $13 billion, reaching a total of $83 billion, according to the report. Price inflation for materials and labor is “not likely to deflate,” but slowed from its 2022 pace.
Brooklyn president Antonio Reynoso identified fortifying waterways as a top priority, following recent flooding. “It’s not about tearing down the Brooklyn-Queens Expressway,” he said, “even though that’s a long-term goal.”
Spending on commercial real estate is expected to grow 32 percent above pre-pandemic levels by 2025, although the outlook for new office construction has fallen precipitously.
While more than six million square feet will be built in three office towers in 2023, about one million square feet of new office can be expected in the years ahead.
Major commercial projects include TF Cornerstone and RXR Realty’s 2.1 million-square-foot project at 175 Park Avenue and the second phase of construction at Hudson Yards.
Read more
Development
New York
On Third Avenue, a game of real estate Tetris
Commercial
New York
CIM, QSuper to deed 1440 Broadway back to lender
Commercial
New York
WeWork’s NYC landlords owe $2.6B in CMBS debt. Can they repay it?
Construction employment remains 5 percent below pre-pandemic levels and won’t reach above that high water mark until 2025, when the Building Congress expects 162,000 construction jobs.
“Over the next few years, government spending on infrastructure development is projected to dominate the construction market,” according to the report. But only $11.7 billion of the $1.2 trillion Bipartisan Infrastructure Law outlay has gone to New York.
Neither the city nor the state keeps a publicly accessible record of BIL funding. “Introducing a centralized system for monitoring the allocation and utilization of BIL funds by both entities,” the report concludes, “would improve transparency and refine project delivery processes.”