Healthy City: Inside New York City's Hospital Building Boom

Economic Impact of Capital Expenditures

The larger New York City economy has benefited — and will continue to benefit — significantly from the wave of hospital expansions. Hospitals and other healthcare facilities are among the most expensive facilities to construct, with all-in costs reaching as high as $1,700 per square foot for some highly specialized facilities. As a consequence, the ripple effect of these capital expenditures on New York City's economy is exceptionally large, generating increases in employment, output, and earnings across a wide array of industries.

To estimate this effect, the Building Congress performed an economic impact analysis to simulate the direct and indirect impacts of hospital construction in the recent past and near-term future. In 2013 and 2014, when capital spending was estimated at approximately $2 billion per year, the effect on business revenues of all New York City firms associated with healthcare construction projects amounted to $3 billion, rising slightly to $3.1 billion in 2015.

By year-end 2016, when direct capital spending by hospitals is expected to reach $3 billion, this will likely generate $4.4 billion per year in business revenues, followed by nearly $4.9 billion in total output in 2017. Direct and total spending in subsequent years will decline, based on current projections, but should increase as long-term construction plans firm up.

The impact on employment is equally significant. The Building Congress estimates that the capital spending on hospitals will generate 11,700 temporary construction jobs in 2016 and more than 13,000 temporary construction jobs in 2017. Factoring in the employment impacts on associated industries, the total employment effect amounts to 19,400 jobs in 2016 and 21,400 jobs in 2017.