NYC construction spending could reach $86 billion in 2022

The construction spending in New York City might hit an all-time high against all odds. The rising borrowing costs, an 8.5 percent inflation, and warnings about recession are among the barriers the construction industry faces. But, this year, NYC construction activity is set to surpass pre-COVID levels.

Spending on construction in the city is set to reach $86 billion by the end of this year, up from $38 billion in 2021, according to the report from New York Building Congress. In 2022, construction spending would exceed the pre-pandemic levels. So far, they have gone up 19 percent or $13.7 billion from 2019. Overall, over the next three years, spending in nominal dollars might rise to $250 billion when adjusted for inflation. 

However, higher construction spending did not cause an increase in the number of available jobs in this industry. The New York Building Congress analysis found that this year, construction employment will total 139,000 jobs, down from 161,000 in 2019.

When it comes to the square footage, the Building Congress estimates that 71.5 million square feet of residential units will be built in 2022. In total, approximately 30,000 new apartments will become available each year starting in 2024. Unfortunately, the demand for NYC homes still outpaces the supply. 

The report called city officials to find a suitable replacement for the 421-a program to increase the housing supply. The program, which expired on June 15, 2022, offered tax exemptions to developers in exchange for adding affordable residential units. According to Carlo Scissura, CEO of the Building Congress, the New York City population has increased by more than 625,000 people in the last decade, while the city managed to add only 206,000 units. 

“Our city is in the midst of a dire housing crisis. We project 30k housing units to be built in each of the coming few years,” New York Building Congress said. “For other cities, this might be enough, but it’s a drop in the bucket in NYC for not only what we need to keep pace, but to erase a chasmic deficit.”

Resources:

“NYC Construction Outlook 2022-2024,” (New York Building Congress, 2022)

“NYC construction returns to 2019 level, but spending shatters record,” by Cailley LaPara (The Real Deal, 2022)

“City construction spending to hit record $86B this year: report,” by Eddie Small (Crain’s New York, 2022)

“Construction Spending Strong in NYC, But City Still Lacks New Housing,” by Mark Hallum (Commercial Observer, 2022)