City residential construction spending to see a 50% boost this year: Report
The city's rebound from the real estate crash will make significant progress this year with a 50% increase in construction, according to a report released Wednesday. But affordable housing advocates say they are being cautious about the progress.
Developers will spend $10.2 billion on residential construction this year compared to the $6.8 billion it spent in 2013 according to the analysis by the New York Building Congress -- a city coalition of labor, construction and government organizations that promotes design and development.
Richard Anderson, the president of the NYBC, said this boost will be beneficial for the city's real estate industry, which he said is still recovering from the recession, because it will create new jobs and more inventory.
"It's just been crawling back," he said of the residential construction. "Anytime you add supply, you deal with some changes."
Anderson said the increase of spending is remarkable because it is shows the market has reached a new high since the recession, where spending was as low as $2.4 billion. He noted that the majority of the new units are higher end and located in Manhattan, Williamsburg, and Long Island City. They are also in other neighborhoods close to Manhattan.
Last week, a report by the Citizens Budget Commission found that a lack of inventory was fueling affordable housing hard to come by for New Yorkers, about half of whom are paying more than 30% of their income on rent.
Jonathan Westin, the executive director for New York Communities for Change, said he wasn't optimistic that the new residential units in the pipeline will provide any relief to the city's affordable housing crisis since the developers spending this cash are only interested in making huge profit on high priced apartments.
"The last thing we need is to create this bubble of luxury housing that's not meeting the needs of the city," he said.
Anderson agreed, and noted that before the recession, residential construction was more varied, with affordable units spread throughout the five boroughs. He predicted that developers will start serving a less-affluent New Yorkers soon, especially since there is such a high demand and Mayor Bill de Blasio has been pushing it as part of his "tale of two cities" agenda.
"There isn't unlimited demand for super luxury apartments. This will run its course or settle down," he said.
In the meantime, Anderson said the city needs to look into implementing zoning changes for neighborhoods that are still designated for manufacturing even though there aren't many businesses occupying that land.
"We need to aggressively go after a plan to change the zoning to free up those sites," he said.