Posted by Leonard Steinberg of URBAN COMPASS on August 14th, 2014

The volume of New York residential construction planned over the course of the next three years keeps growing: We are now approaching $50 BILLION worth of new rental and condominium buildings. Here are some recently released statistics:

  • Spending on residential construction will hit a new record high in 2014 of $10.2 billion, up 50% from 2013. 2013’s total was $6.8 billion. When adjusted for inflation, the value of construction in 2013 was about 13% below the peak of 2007.
  • Construction will yield fewer units—20,000—than the 30,000 per annum pace that was hit several times in the last real estate cycles much more money will be spent on luxury properties designed for the wealthy.
  • With so much concentration on super-luxury properties, is it possible this area may experience an over-supply of too-similar properties? Those that are diversifying the product mix will be rewarded for going against the grain.
  • A rise in construction costs contributed to the decline in the number of new residential units built compared to the last boom.
  • New York City is trailing behind most other growing cities in terms of the percent change in total housing units between 2000 and 2012, with a gain of under 10% in that 12-year span.  New York City came in 19th out of 22 large cities in the country. More limited supply will keep pricing high.
  • The good news is the current boom in residential construction has created thousands of new construction industry jobs and increased economic activity and tax revenues. The residential sector will lift total construction spending across all sectors by 10% this year over 2013. More revenue for the City means a healthier balance sheet, fewer unemployed and fewer reliant on government assistance.
  • Total construction spending is estimated to increase from $28.5 billion in 2013 to $31.5 billion by the end of 2014 and increase of over 10% in one year.
  • Spending on commercial buildings is expected to dip slightly from 2013’s $8 billion figure.  Hudson Yards and World Trade Center area construction should boost these figures dramatically in 2015.