Peak Construction? Are You Nuts?!
For those who claim that construction has crested in New York City, the numbers tell a different story
New York’s building boom isn’t ending. Contrary to recent claims that a slight dip in filed building permits signals the end of the historic growth that has transformed the five boroughs, we can safely say that the state of New York City’s construction activity remains strong.
In fact, with nearly 165,988 permits filed last year, according to the New York City Department of Buildings, 2018 saw the second highest number of filed permits in New York City history. In total, the number of new permits is significantly higher than the five-year average.
Construction in New York City, like all industries, will continue to go through the peaks and troughs of economic cycles, but previous cycles have been five, seven, or 10 years in length. A 1.3 percent decrease in permits does not represent a broader trend. And a year-to-year snapshot of building permits is by no means an accurate measure for understanding the larger boom-bust economic cycle of the building industry. Individual projects operate on multiyear timelines, incorporating many phases of financing, design, permitting, construction, fit out and completion. Permitting is just one part of this lifecycle and doesn’t represent projects that are currently being financed, planned and designed.
Throughout 2018, nearly $61.5 billion was spent in the New York City construction industry, representing a 25 percent increase from 2017, when construction spending reached $49.3 billion—making it the highest total (in actual dollars) in New York City history.
Over the next three years, the New York Building Congress forecasts over $177 billion in construction spending, with anticipated 2019 spending to remain relatively the same at $59.2 billion, followed by $56.4 billion in 2020.
The point is, a 1.3 percent drop in permits being filed in 2018 certainly doesn’t qualify as a doomsday scenario. It doesn’t even constitute a decline in construction activity.
Some of New York City’s most transformative projects are currently underway, including those on the west side of Manhattan, Midtown East and the continued redevelopment of Lower Manhattan, as well as an unprecedented amount of growth in the outer boroughs, with landmark projects in the South Bronx, Long Island City, Jamaica, Willets Point, Downtown Brooklyn, and along the Brooklyn waterfront. There are a plethora of innovative, remarkable developments coming to fruition that will leave a lasting mark on New York.
And plans for new construction aren’t slowing down anytime soon. Places such as Halletts Point continue to see significant investment, and planned rezonings of neighborhoods like Gowanus will bring many new opportunities. Not to mention the substantial growth still in the pipeline as New York City continues to attract some of our country’s most sought-after companies including Amazon, Google, Apple and Facebook, and allows companies like JP Morgan Chase and Disney to expand.
There are also billions of dollars of construction not accounted for by the DOB permits—including work on some of our city’s major infrastructure projects such as roads, bridges, airports, subway expansions and improvements, and energy infrastructure.
These investments keep New York City moving and create the framework necessary to allow our city to thrive. It’s these types of investments that keep New York City competitive on both national and international platforms.
In fact, the planned work over the next couple of years is astonishing. Infrastructure improvements—such as the plans for LaGuardia and John F. Kennedy International Airports, the Moynihan Train Hall, East Side Access and the Kosciuszko Bridge—are still in the works and will have a tremendously positive impact on our city, both for New Yorkers and for tourists.
The New York Building Congress remains incredibly proud of all these successes and we look forward to continued growth in all sectors of New York’s building industry. Make no mistake—this industry is building the future of New York, and that future is a bright one.
Carlo Scissura is the President and CEO of the New York Building Congress.