NYBC: Value of NYC construction starts plunged 22% in 2016

Dive Brief:

Construction starts in New York City were valued at $32.2 billion in 2016, a 22% decline from $41.1 billion in 2015, according to the New York Building Congress, based on data from Dodge Data & Analytics. Still, the value of starts in the city last year was roughly 34% ahead of the average of its starts from 2011 to 2015, which were $24.1 billion.
The plunge was driven almost entirely by an $8 billion, year-over-year drop in residential starts, according to The Real Deal, but that sector's $11.5 billion for 2016 was still higher than the average of its previous five years' activity.
The nonresidential category was the major driver of construction in 2016 and in particular the commercial sector, which rose from $11.9 billion in 2015 to $12 billion in 2016 on the back of new office tower starts.

Dive Insight:

NYBC President and CEO Carlo Scissura said in a statement that although residential activity decreased during the year, the more than $11 billion in starts was encouraging considering the recent expiration of the 421-a tax credit. Its latest iteration, called Affordable New York, could cost taxpayers up to $5.7 million per 300-unit building.

Construction spending is expected to reach $127.5 billion by the end of 2018 and $42.1 billion this year, according to an earlier report from the NYBC. There was no indication in the latest report that those projections have changed.

In its October report, the organization said that private, not public, development would be the primary growth driver for the next few years. The NYBC predicted that office starts, the continuing star of the commercial sector, would add more than 11 million square feet of space in Manhattan from 2016 to 2018, primarily due to massive undertakings like the $3 billion One Vanderbilt mixed-use project located next to Grand Central Station and the $25 billion Hudson Yards development.

The NYBC reported a drop in institutional starts, which includes city schools, cultural facilities, universities and hospitals. This sector could be buoyed by an $89.4 billion, 10-year capital spending plan, courtesy of the de Blasio administration. Last month, the mayor's office announced that, as part of the spending initiative, it would allocate $384 million to upgrade city-owned schools and offices.