The New York Building Congress notes that the city’s construction industry spent a whopping $36 Billion in 2014, a 26% jump from the previous year. Over the last year, residential construction spending has surged to 73% reaching a high of USD11.9 Billion, and for the first time in record history has topped the $7 Billion mark. The surge in construction may be due to an improved economy, increase in foreign investment and some public and private sector initiatives that allowed the industry to bounce back and reach near the boom territory once more.
That being said though, it is also noteworthy to see that even with the humongous cost increase, the increase in unit production has not kept pace with only an 11% increase in number of units from the 2013 numbers. The 20,329 new units produced last year is still way below the 2005-2008 annual production which is pegged at more than 30,000 units annually. According to the Building Congress, these numbers suggest that construction is geared towards luxury housing with an eye towards wealthy buyers.
Cause for Concern?
At one point, this is very good, the construction industry is at a great boom, but from another point, this can be a cause for concern, since more housing is required for the middle class residents rather than the “super-rich” for which the new developments are geared towards. New York City Mayor Bill De Blasio, proposed in February to require developers include affordable housing in their development plans and to include subsidies for residents who are in danger of losing their properties.
New York City is a diverse city with various activities and according to Richard Anderson, Building Congress President, it needs to be job generating and cannot survive on luxury housing alone. Construction needs to be geared towards infrastructure that will sustain an economy. While on another report, New York Building Foundation chairman Frank Sciame, notes that while all new housing projects are certainly welcomed, the city’s ability to provide a variety of housing with varying price ranges throughout the 5 boroughs will play a vital role in the city’s future success.
