New York city building is hot – and that’s been the word on the street and around the country for the last few years. But could the Big Apple construction activity be cooling?
In an article published by the Commercial Observer, data from Dodge Data & Analytics showed, “The dollar volume of commercial and multifamily building construction starts for the first half of the year fell 27 percent to $7.2 billion from $10 billion over the same period last year. That’s also a staggering 63 percent fall from the first six months of 2015 when it was $19.3 billion, the data indicates.”
Is NYC headed towards a recession? Not so fast.
The crane count keeps builders optimistic, however, they have seen a reduction in building scope, something experts attribute to a “resettling from an exceptional pace” that NYC encountered in 2015.
The good news is that the New York Building Congress (NYBC) estimates that there will be $42.1 billion spent on construction activity in 2017 and then $42.3 billion in 2018.
What may limit growth?
If construction in NYC is slowing, costs may be the reason why. According to the 2017 International Construction Market Survey, New York is the most expensive place to build with costs increasing by 3.5 percent, and labor averaging close to $100 per hour (compared to $28 per hour in smaller regions).
In addition, foreign investments may decrease due to tougher trade measures and a slowdown of Chinese investments based on their stricter scrutiny of offshore investments.
Is there cause for alarm?
If interest rates increase, the slowdown could become more impactful, until then, analysts are keeping an eye out for signs of a steeper downturn.