Little guys seeing big action in cityʼs booming new construction sector
Published on Aug 30, 2018 by
Little guys seeing big action in cityʼs booming new construction sector
by Real Estate Weekly
August 30, 2018
While showcase developments such as Hudson Yards grab most of the headlines, New York construction’s middle market has become a powerhouse.
A review of 2013-2017 new construction starts data reveals that spending on mid-market projects has increased 155 percent from 2013 to 2017 – an increase greater than both high and low market construction.
In 2013, spending on mid-market projects totaled $1.1 billion and most recently topped $2.8 billion in 2017.
In addition, most hotels built between 2013 and 2017 were mid-market projects. By borough, Staten Island and the Bronx had the highest percentage of mid-market projects compared to high and low market construction.
“New York’s greatest strength has always been its diversity – from the people that live here, to the careers they pursue, to the buildings and neighborhoods they reside in,” said New York Building Congress President & CEO Carlo A. Scissura.
“As an industry, the construction projects we’re building are equally diverse. High-rise office and residential towers may garner most of the headlines, but our members are building at all scales throughout the five boroughs and more and more is being done at the smaller and mid-size levels. This variety of building helps ensure our residents and businesses continue thrive and our industry remains strong.”
Mid-market hotel construction ($10m–$100m) accounted for 60 percent of the value of all hotels built between 2013 and 2017 in New York City. Of the $4.5 billion in total new hotel construction, mid-market projects accounted for $2.7 billion. When comparing the size of construction projects, mid-market hotels accounted for 58 percent of the square footage of new hotel space built over the same period. Of the 15 million square feet of new hotels, mid-market hotels accounted for 9 million square feet. There were 117 hotels built between 2013 and 2017, and 78 of them (or two-thirds) were mid-market hotels.
Furthermore, mid-market hotels accounted for the majority of hotel projects in almost every borough. Roughly 65 percent of the hotels in Brooklyn and Queens were mid-market. In Manhattan, a staggering 81 percent of hotels built between 2013 and 2017 were mid-market projects.
In retail construction, mid-market ($1m-$25m) projects outpaced both high and low-market projects. Of the 402 retail projects built between 2013 and 2017, 210 (52 percent) were built in the mid-market range. When combined with low-market projects, they account for 95 percent of all new retail construction. High-value projects only accounted for five percent of all new retail projects but represented 63 percent of the total value.
Office construction was dominated – both in terms of the value of the project and in terms of newly built square feet – by projects over $100m. Of the $12.7 billion in new office construction between 2013 and 2017, projects over $100m accounted for almost 88 percent of the total value. Projects over $100m in value accounted for 76 percent of the total 22.7 million square feet of new office construction. Mid-market office projects ($10m-$100m) accounted for 15 percent of new square footage built and 10 percent of the gross value of all new commercial construction.
Between 2013 and 2017, there have been 140,181 residential units built across New York City. Forty-five percent of these units were built in projects greater than $100m, 40 percent were built in projects less than $10m, and 14persent were built in mid-market projects ($10m–$100m). Over the same period, 164 million gross square feet was either completed or permitted.
The range of low, middle and high markets was determined from a distribution analysis of the value of New York City construction permits for new buildings during the last full year of study (2017).
For this report, the middle market for new construction is defined as Office Construction $10 to $100 million; Hotel Construction: $10 to $100 million; Retail: $1 to $25 million and ; Residential $25 to $50 million.
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