Office Drives NYC Construction Uptick

NEW YORK CITY-Private developers—especially in office—are driving an uptick in construction spending even as government's share is ebbing, the New York Building Congress said Monday. The association projects overall construction spending in the city to reach $37.3 billion in 2014, up 24% from 2012 and up even more sharply from '14 projections the association made last October.

At that time, the Building Congress forecast spending of $30.2 billion in 2013—its revised forecast calls for spending of $32 billion this year—and $29.1 billion in 2014. “The upward revisions in our forecast, from data compiled over the past few months, particularly for the private sector, are extremely encouraging,” Building Congress president Richard T. Anderson says in a release.  Although the effects of inflation and post-Sandy rebuilding are contributing factors, “there is no doubt that much of the gain is fueled by increased private-sector development activity and an improving economy.”

That private-sector uptick—including office property and hotel development—is part of an overall 38% gain in projected non-residential construction spending this year, the Building Congress says. Office in particular is powering the increase after virtually disappearing from the map during the downturn. The Building Congress projects nearly 2.5 million square feet of Manhattan office space will be added this year, and another 3.9 million square feet next year. 

In the residential sector, the Building Congress projects a 56% increase from 2012 to 2014, when $8 billion in housing construction is forecast.  By contrast, just $2.3 billion of residential building took place citywide in 2010.

Government spending, ranging from mass transit to public schools, is forecast to reach $12.4 billion in 2013, off 18% from the $15.1 billion spent last year. The Building Congress expects it to rebound somewhat in '14, reaching $13.8 billion for the year. 

“The near-term outlook in the non-residential sector is really quite extraordinary,” Steven Spinola, president of the Real Estate Board of New York, says in the release. “While it has taken longer than initially anticipated, the public-private partnerships that were formed to rebuild the World Trade Center and open up Manhattan's Far West Side are starting to pay big dividends.”