NYBC | Research & Analysis | Charts & Graphs

Charts and Diagrams

Table of Contents

About Construction Outlook

Factors that could Alter the Outlook

Charts and Diagrams

Construction spending in New York City is expected to reach $17.8 billion in 2001, a 23% increase from 2000 when spending totaled $14.5 billion. Based upon analyses of public and private capital commitments and development plans, the Building Congress anticipates construction spending will remain high for several more years, averaging about $16 billion through 2004. At that level, the construction outlook for the near term will be more than 50% greater than volume of the mid 1990s.


Residential construction in New York City is expected to exceed 16,000 units in 2001, up from 15,000 in 2000 and just over 12,000 in 1999. With residential vacancy rates below 3%, population rising, and rezoning encouraging more high rise development, the demand for housing remains strong. Current construction levels are three times higher than in 1995 when little more than 5,000 units were authorized. Affordable housing construction continues to lag behind market rate development, and all new housing construction falls short of the minimum need of 20,000 units per year.		Non-residential construction in New York City is expected to exceed 19.7 million square feet in 2001, up from 12.5 million last year and 5.4 million in 1995. Significant among the major properties currently under construction are 9 major office developments in Manhattan which are expected to deliver 9 million square feet of space in 2001 and more than 12 million square feet from 2002-2004. In the prior four years, 1997-2000, only 3 million square feet of office space was built in Manhattan.

New York’s construction industry employment reached record levels in 2001 with 130,000 jobs reported in general contracting, special trades and heavy building. Construction workers on public agency payrolls are not included in these totals. With construction labor expanding by as much as 16,000 jobs over the past two years, it is likely that industry employment will remain at 130,000 jobs by 2004. However, based upon projected construction volume, the need for construction workers in 2002 could well outstrip supply by 30,000 or more. If this shortfall is not addressed, job delays and higher overtime costs could dampen the expected level of construction activity.

With the New York construction cost index rising under 3.25% on average per year since 1995, costs in the City seem to be in line with the 3% average annual national increases. However, anecdotal information, final delivered costs of housing and office construction, and construction labor payments argue for steeper rates of construction cost escalation in the New York area. Comprised of a fixed portion of labor and material inputs, the index cannot factor in overtime, job delays, higher material transport costs, and related factors that have pushed the City’s unit construction costs up by roughly 10% per annum over the past few years. On the demand side, a shortage of office and housing space and a rapidly growing employment market have pushed vacancy rates down and asking prices up, making higher construction costs affordable in the near term but less attractive for the economy over the long run.