NYC Construction Spending at All-Time High of $86B in 2022
NEW YORK—New York City construction spending will reach $86 billion in 2022, up $38 billion from last year and marking an all-time high, according to a new report released by the New York Building Congress on Oct. 19.
In its “2022-2024 New York City Construction Outlook,” the NYBC found that construction spending in New York City is 19% higher in 2022 than the previous pre-pandemic high in 2019, and is projected to reach $270 billion in nominal dollars over a three-year period.
“Our report showcases an optimistic future for New York City’s building and construction industry, highlighting a roaring recovery over the past year and signaling a promising outlook for the next three years,” said Carlo A. Scissura, President & CEO of the New York Building Congress. “The New York Building Congress has witnessed the industry’s resilience throughout the uncertainty of the past few years firsthand, and we firmly believe in its ability to drive economic growth across the New York region. We are eager to see what the next few years will bring—aided by the federal infrastructure investment—and remain committed to leading the charge on development that will benefit all New Yorkers.”
The Building Congress’ annual Construction Outlook examines key construction spending, employment, floorspace and investment data across sectors to both provide updates on the state of the industry and make projections for the coming years. This year’s report found that despite numerous obstacles from the pandemic and economic uncertainty, the city’s construction spending and investment in building infrastructure is rapidly increasing, with even more growth expected following the historic Infrastructure Investment and Jobs Act.
Key insights from the report include:
- 71.5 million square feet of residential floorspace is expected to be built in 2022. Permits for residential projects peaked from May through July, with much of the activity likely aimed at getting ahead of the expiration of the 421-a tax exemption program. NYBC estimates that 30,000 units of housing will be built annually over the next three years, which, while impressive, remains insufficient against a projected gap of over 560,000 units by 2030. While the projected new square footage of residential construction built over the next two years is two times higher than projected non-residential construction, with the absence of the 421-a program or an alternative, this report sends up a red flag that the number of residential projects is likely to decrease without intervention from New York City and state-elected officials to incentivize building. “We need to find a suitable replacement for the expired 421-a program, streamline the land use review process, and increase as-of-right zoning capacity,” Mr. Scissura said. “Not only does the city’s economic recovery depend on it, our current housing crisis demands it. The city’s population has increased by more than 625,000 in the previous decade, while we have added only 206,000 units. That is not only unsustainable, it’s alarming—and justifies a swift and decisive response.”
- Non-residential growth over the next three years will be driven by large investments in new offices and healthcare facilities, as opposed to hotels and retail. Looking forward, three mega-towers with nearly 6 million gross square feet are scheduled for completion in 2022, while five large skyscrapers will deliver 10 million square feet of new office space over the 2023-24 period.
- The Building Congress predicts 105.1 million gross square feet built in 2022, surpassing pre-COVID levels. This figure is forecasted to increase further over the next two years, to 110.8 million in 2023 and 118.2 million in 2024.
- Government spending under current conditions and adjusted to inflation is expected to increase to almost $21 billion in 2022, $23.6 billion in 2023 and $26.9 billion in 2024, significantly higher than pre-pandemic spending.
- During the peak of the COVID-19 pandemic, government investment in construction and development exceeded one-third of total construction investment in New York City—a high proportion given the prior five years — an indication that government spending did not decline as rapidly as private construction investment.
The Building Congress anticipates employment in the construction of buildings, heavy and civil engineering and specialty trades to reach 139,000 jobs in 2022, a decrease from 161,183 jobs in 2019. Employment data highlights the need for a robust investment in training, workforce development and apprenticeship programs to adequately prepare for increased construction activity in the coming years.