POLITICO PRO
Janaki Chadha, 10.13.20
New York City construction spending in 2020 is expected to be more than $10 billion short of forecasts made prior to the coronavirus pandemic, according to a new report from the New York Building Congress.
Impact: The industry group projects $55.5 billion in construction spending across the five boroughs this year, which would be an 8.5 percent drop from the $60.6 billion spent over 2019. In last year’s outlook report, the group forecasted $65.9 billion in construction spending in 2020.
The group is also anticipating an average 14 percent fewer construction jobs over the next few years than there were over a previous three-year period, the report said.
“The COVID-19 pandemic and resulting recession have been extremely difficult for New York City and its building industry. Construction activity in January and February was on pace to result in another standout year for growth,” the report said. “However, as the virus swept through the city in March, April and May, economic activity virtually shut down and local restrictions on construction took effect.”
Despite the drop, the report notes the $55.5 billion total for 2020 would match the then-record-breaking amount spent in 2017.
Still, the group is not projecting a swift bounce back to pre-Covid trends. Construction spending is forecasted to be $56.9 billion in 2021 and $56.1 billion in 2022, per the report.
Residential construction spending, which hit a peak of $19.7 billion in 2019, is expected to drop to $14.3 billion in 2021 and $12.5 billion in 2022. As a result, there will likely be 33 percent fewer new housing units between 2020 and 2022 than there were between 2017 and 2019, the report said.
The group forecasts a sharp decline in nonresidential spending this year, while anticipating an uptick in spending on government projects.
What’s next: The Building Congress surveyed members on their outlook for the city’s construction market, and found a majority of respondents reported a low level of confidence that the market “will provide them with sufficient new business opportunities in 2021 and 2022.”
Of the members surveyed, 73 percent said they anticipate a drop in the amount of new building construction through 2022.
