April 30th 2015
New York City has gone condo crazy.
Citywide spending on the construction of apartments skyrocketed to a record $11.9 billion in 2014, a massive 73% rise over the last 12 months and nearly $5 billion over the previous record, according to a new report by the New York Building Congress.
But more dollars spent doesn’t necessarily mean more housing for New Yorkers.
Instead, developers are plowing historic levels of cash into delivering only a few massive high-end pads with luxe finishes targeted at the global elite.
“With all this spending, you might wonder if the walls are made of heroin instead of sheet rock,” said real estate broker Jason Haber of Warburg Realty. “But developers need to spend a lot and deliver that razzmatazz if they’re going to attract these types of buyers.”
Just 20,329 new units of housing were produced last year, a comparatively meager 11% annual increase from the year before and well short of the 30,000 units of new housing that were created annually between 2005 and 2008.
The rising tide of the real estate market is lifting other sectors, too.
Non-residential construction spending, including hotels, offices and events venues, was up 20% last year – from $8.2 billion in 2013 to $9.8 billion in 2014- and government construction spending, which includes investments in mass transit, public schools, roads and bridges, grew by 7% – from $13.4 billion in 2013 to $14.3 billion, according to the report.
Overall, construction spending hit $36.0 billion, a 26% increase from 2013.
The boom in development is buoying the construction industry, which added more than 2,000 jobs in just a year, making its ranks bigger than they’ve been since the height of the market in 2008.