Annual Report 2016

The Sky's the Limit

New York City has undergone an amazing transformation over the past decade.

This transformation is readily apparent on the skyline, where a host of supertall towers have joined New York City's most iconic structures, and at street level, where new neighborhoods have taken shape and impressive new transportation amenities, such as the World Trade Center Transportation Hub and the Number 7 subway extension, have opened to the public.

New York Wheel, Perkins Eastman/S9 Architecture

A NEW NEW YORK

Just as impressive - but far less appreciated - are the enormous economic and demographic changes that have occurred since the end of the Great Recession. These changes have been every bit as transformative and have served to underpin our industry's remarkable strength over the past five years. Since the previous peak of 2008, New York City has added over 430,000 new jobs. More than a quarter of a million of those jobs were created in 2014 and 2015 - perhaps the best twoyear gain in the City's history. A total of 4.2 million people are now working in the five boroughs, and nearly 60 percent of the City's population is currently employed - the highest level in at least four decades.

This expansion has been geographically dispersed - with much of the job growth occurring in Brooklyn and Queens, followed by the Bronx, where employment has increased by 23 percent over the past two years.

New jobs are being created in a wide range of market sectors, including technology, media, healthcare, higher education, and tourism, further diversifying an economy that for decades has been dominated by the financial industry.

And along with drawing top talent to some of the best companies in the world, New York City is attracting tourists and new residents in everincreasing numbers. The Big Apple welcomed more than 58 million visitors in 2015 alone, breaking a record for the sixth consecutive year. What's more, NYC & Company recently predicted that nearly 60 million people will visit New York this year and that the 67 million mark could be reached by 2021.

The City's population has grown considerably, too - by more than 300,000 people over the past five years and by nearly half a million since the turn of the century. That is by far the biggest increase in any American city over that same time period. In fact, New York City has added more residents over that period than Los Angeles, San Francisco, Washington, D.C., Boston, and Chicago combined.

CONSTRUCTION BOOMING
All of this economic and population growth has helped fuel the second building boom in the span of a single decade. With soaring confidence in New York City's future, the private sector is investing tens of billions of dollars annually in new housing, offices, hotels, and attractions.

An amazing $40 billion worth of construction projects were initiated across the five boroughs in 2015, and the New York Building Congress forecasts construction spending will increase even further to $41 billion in 2016 and $40.8 billion in 2017. More new office space is being built than at any other point in the past quarter of a century. Spending on residential construction is at an all- time high and is likely to produce more than 90,000 new units between 2015 and 2017. New hotel rooms have been added at a blistering pace, and the City's bedrock cultural institutions and schools of higher learning continue to expand and modernize.

Ambulatory Wing of Mount Sinai Queens, Courtesy of Davis Brody Bond

CHALLENGES OF SUCCESS
Of course, this spectacular growth does not come without the challenges that are brought about by success. Given all this construction activity, New York City's labor supply is being stretched to capacity. To meet demand, the building community must redouble its efforts to recruit and retain a far more diverse and well-trained workforce. The industry must also be vigilant about safeguarding the health and quality-of-life of the City's residents and workers who encounter construction sites every day.

In addition, the design, construction, and real estate industry must make a commitment to promote innovation and building to the highest possible standards for safety, efficiency, and cost-effectiveness.

Perhaps most importantly, New York's leaders in government must make it a top priority to invest in the modernization and expansion of the vast infrastructure networks that serve as the lifeblood of the region's economy and quality of life.

While the residents, tourists, students, and jobs pouring into New York City are helping to fuel the building boom, they also are putting extraordinary pressure on the City's aging infrastructure.

Rendering of One Manhattan West, Courtesy of Brookfield Properties, Credit: Miller Hare

THE INFRASTRUCTURE IMPERATIVE
To accommodate current and anticipated growth, New York must ensure that the capacity of its roads, bridges, transit, airports, schools, parks, and other public works grows in lockstep with its residential neighborhoods and commercial districts.

World Trade Center Transportation Hub (above) and 30 Park Place (right), Credit: Joe Woolhead

Unfortunately, after years of straining to keep pace with new development, New York City is in danger of falling further behind.

According to the Building Congress' most recent three-year forecast, 2015 government spending was at its lowest level since 2001 and down 38 percent from its peak year of 2008. Increases in government spending are anticipated in the coming years; however, even the expected $16.3 billion in spending for 2017 would fall short of the inflation-adjusted investments that were made annually from 2005 through 2012.

Such declines are a source of concern in any year, but even more so in a period of skyrocketing private investment and solid economic growth. As if meeting these increasing demands were not challenging enough, New York City's infrastructure is in need of billions of dollars in additional investments targeted at fortifying its systems against the rapidly growing threat of extreme weather events.

To their credit, New York's elected leaders have stepped up recently with a number of major initiatives designed to dramatically increase the region's transportation capacity while also adding to the City's housing stock and office inventory.

As part of its 2016 Policy Agenda (see page 8), the Building Congress has prioritized advancing these initiatives, which include redeveloping LaGuardia Airport, building the Amtrak Gateway project, and completing the East Midtown rezoning.

SUSTAINING THE MOMENTUM
New York City is more popular today than ever. People from around the world see New York City in 2016 as the greatest place on earth to visit, study, work, and raise a family.

They are drawn to New York's safe and dynamic neighborhoods; to the world's most creative companies; to New York's arts, culture, and other attractions; and to the educational opportunities offered at the more than 100 colleges and universities across the five boroughs.

Of course, there will always be ups and downs in the economic cycle, which is a fact of life in an increasingly interconnected and global economy. But given the sheer breadth and depth of the City's strengths and desirability, New Yorkers should expect that the dips will not be severe or last quite as long as in other cities.

And as long as the region's elected officials are willing to invest for the long-term, then the sky is truly the limit for New York City in the 21st century.