New York Costruction Nears 2007-2008 Levels

New York City construction activity resembles the previous boom years of 2007 and 2008, the New York Building Congress said.

The Big Apple displays a “white-hot” residential market and the strongest office construction in a quarter century, NYBC said yesterday in its New York City Construction Outlook 2015-2017.

“That’s a fair representation,” said Matt Galligan, president of CIT Real Estate Finance, New York. “If you’re in a cab around midtown, traffic is slow because of all the cranes. You’ll go by a lot of cranes in Greenwich Village, the West Village, Tribeca; there’s a lot going on.”

Construction employment in the five boroughs should reach 130,900 this year, up by 3,300 jobs from 2014, NYBC–a coalition of organizations involved in New York’s design, construction and real estate industries–predicted. If realized, construction employment would surpass 130,000 jobs for just the second time since 1995, when the organization started tracking these data. The city reached its high-water mark for construction employment in 2008 with 132,600 jobs; NYBC said New York City construction employment should reach 131,800 jobs in 2017.

NYBC predicted New York City construction spending will reach $39 billion in 2015, up by 10 percent from 2014. The organization expects construction spending will increase even further over the next two years to reach $40.8 billion in 2017. If the forecast holds, overall New York City construction spending would break the $40 billion barrier next year for the first time.

While 2015 and 2016 construction spending could set consecutive records in terms of actual construction dollars spent, both years would fall slightly below the prior building boom in inflation-adjusted terms. Developers spent the equivalent of $40.3 billion in inflation-adjusted terms in 2007, NYBC said.

Construction budgets increased significantly over the last year, Galligan said. “I don’t think supply will be a factor this time around, but demand could be because of increases in construction and land prices are so significant that you’re into a whole different realm.”

Galligan said the deals CIT finances have not seen absorption issues. “The market is able to absorb what is there, but at some point it will run out of people that can afford that and there will be absorption issues,” he said.