In a city that thrives on the mantra, “Go big or go home,” nowhere is this as apparent as the development of new construction in Manhattan. The biggest critic of the Manhattan real estate development is, not surprisingly, none other than the business itself. In an industry where the indicators of success each fiscal year is judged by how much taller, more extravagent and expensive this year’s projects are compared to the last, 2011 has been criticized as a less-than-stellar year for new construction. Both DNAinfo.com and The Real Deal recently reported that “new constructions in New York City saw a 31 percent decline last year.” Never one to be easily alarmed or fazed by popular headlines, the New Construction Manhattan Blog decides to take a second look at the data and offers a second opinion on the current affairs.
Given the quantity of big-name projects that began in 2010 (World Trade Center, Madison Square Garden & Barclays Arena to name a few), the bar was high and so were hopes for new and extraordinary construction developments in 2011. So the news that development projects saw a 31 percent decline from $20 billion to $13.8 billion last year was initially greeted with some trepidation. In short, other than the headlining $1.2 billion project at John F. Kennedy Airport’s Terminal Four and the $2.9 billion expansion of the Number Seven subway line, 2011 lacked many of the head turning developments that saturated 2010. But on closer inspection, the news is less dire than it sounds.
The majority of the decline occurred within the non-residential (39 percent decline to $8.4 billion) and public sectors (34 percent decline to $2.6 billion). But while commercial construction is at a year low, the New York Ciy residential market has rebounded close to pre-recession heights -- and this uptick can be attributed, ironically enough, to the recession. As the quantity of new residential construction continues to stagnate, the demand for high-end Manhattan apartments continues to soar, and many sellers have been able to increase their asking price and turn a significant profit from the hesitation of the current market.
No one can deny that many industries, regardless of sector, have been heavily affected by the climate of the U.S economy during the past couple of years. In the meantime, those of us at New Construction Manhattan are keeping our ears on the ground and our eyes on the horizon. With the residential market undergoing a strong revival, commercial and public development is likely to soon hit a similar revival, stoked by similar rising demand as inventory dries up. After all, there are still 11 months ahead of us and spring is just around the corner.