The construction industry has been one of the top employers in the entire country, and the benefit of a lot of construction jobs can be seen throughout NYC. The New York Building Congress (NYBC) estimates that the total value of the NYC construction industry will reach $127.5 billion by the end of 2018. If past construction trends stay in place, then more than half of that revenue will be generated in the borough of Manhattan.
Manhattan’s Recent History Of Prosperity
From 2011 to 2015, 58 percent of the revenue generated by construction projects in NYC came from projects in Manhattan. This includes both residential construction and non-residential construction. While the Bronx and Brooklyn had seen significant increases in the number of building permits issued in recent years, nothing has beaten Manhattan as far as project value goes.
For non-residential construction, Manhattan was the hive of activity from January to September 2016. During that period, 70 percent of all non-residential construction dollars were spent in this borough, and that number looks to continue that pace through to the end of the year. When it comes to residential construction projects, Manhattan claimed 50 percent of all revenue for that same time period.
Big Ticket Projects In The Borough
The Manhattan construction industry is very good at exploiting the two aspects of the borough that keep developers coming back. The borough’s reputation as a home for high-priced residential and non-residential properties has never been tarnished. When developers build in Manhattan, they know that the borough’s name alone allows for the highest rents in the city. Read our previous blog about this here.
Manhattan earned that solid real estate reputation because it is one of the financial capitals of the world. Trade and finance are constantly flowing through this borough, and any company that needs to be at the center of that economic activity needs to be located there. A constant rise in new but occupied commercial property means a rise in residential property demand.
It is important to note that the borough’s sustained real estate dominance is based on project value and not the number of permits being issued. The Hudson Yards Project that is expected to be completed in 2019 represents $25 billion worth of construction revenue all on its own. The One Vanderbilt commercial project is expected to generate $3 billion in construction revenue by the time it is completed in 2020.
The Immediate Future Is Bright
It is estimated that Manhattan will add at least 20 million square feet in commercial development by the year 2021. That is far and away the largest developmental number that will be achieved in NYC construction. For the same time period, Brooklyn and Queens together are expected to generate only 13 million square feet of new office space. As the projects continue to get announced, it becomes obvious that the really big projects are going to be taking place in this borough.
How Long Can This Prosperity Go On For?
The immediate residential and non-residential construction future for Manhattan seems bright, but many observers are indicating that this kind of prosperity may not be sustainable. For one thing, the borough is not the kind of place where office structures get torn down to make way for new and redeveloped space. There may be some renovation going on in Manhattan, but most tenants tend to stay for a very long time and that means that the land in the borough does not get reused like it does in Brooklyn or Queens.
The simple fact is that the land available for any kind of development in Manhattan is starting to disappear. As Brooklyn and Queens continue to take on the lion’s share of residential projects, the focus in Manhattan is large-scale office space and commercial development. Some in the NYC construction industry are starting to wonder if Manhattan’s construction dominance will start to wane when the available property starts disappearing.
The Manhattan construction industry has been dominating NYC construction for years. However, with tenants who tend to stick around for decades and no real need to re-develop any of their lands, the borough could be looking at the end of its developmental dynasty. But for now, Manhattan reigns as the top borough for construction by project value, and it will retain that title for several more years to come.