Real estate developer and head of Asset Realty & Construction Group Dino Tomassetti Jr. shares that per the New York Building Congress’ Construction Outlook 2020-2022 report, construction spending is projected to exceed actual spending from eight of the past 10 years, which comes as a surprise given the economic impact of COVID-19 on almost all industries.
The report notes that construction spending in 2020 is expected to hit $55.5 billion, which would represent an 8.5% decline from 2019’s $60.6 billion. However, the estimated $55.5 billion would match the record-breaking amount three years back, in 2017.
The New York Building Congress sees total construction spending to reach $168.5 billion within three years, between 2020 and 2022, expecting $56.9 billion in 2021 and $56.1 billion in 2022.
The signature publication also reports 128,200 fewer construction jobs in the New York City building in 2020, slightly below 2014 levels. The silver lining to this is that the report suggests employment will bounce back in 2021 with 136,650 jobs and in 2022 with 140,200 jobs. The forecast for 2020 through 2022 is expected to average 14% fewer construction jobs than the 2017-2019 period.
The Building Congress anticipates residential construction spending to reach $17.8 billion this year, which is down from the peak of 2019, pegged at $19.7 billion. Residential construction is expected to add 20,450 units in 2020 and 15,000 units in 2021 for 50,450 new housing units from 2020 to 2022. The forecasted period will likely result in 33% fewer new housing units and a 14% drop in constructed square footage of floor space, compared to the 2017-2019 period.
Moreover, non-residential construction spending, comprising office space, institutional development, hotels, and sports and entertainment venues, is expected to total $16.6 billion in 2020, which is lower than 2019’s $21.2 billion. Office construction is expected to grow in 2021 and dip in 2022, with spending driven by the increase in interior renovations and a decrease in core and shell construction. The report also suggests that a portion of the new office starts will push past the forecasted timeframe into 2023 and 2024.
The Building Congress also anticipates the construction spending throughout the five boroughs by the Metropolitan Transportation Authority will increase to $8.7 billion this year, from 2019’s $8 billion.
Additionally, the Port Authority of New York and New Jersey is expected to invest $3.5 billion in New York City capital projects this year, an increase from 2019’s $2.1 billion.
“While New York City was one of the hardest-hit areas in the US and is still reeling from the effects of COVID-19, the building industry is weathering the storm and remains the heartbeat of the city’s economy,” explains Carlo A. Scissura, President & CEO of the New York Building Congres. “This report evidences both the resiliency of the building industry and that investment in infrastructure creates jobs and boosts economic recovery. The Building Congress will continue working to ensure that this growth lasts for years to come.”
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