New York in Building Boom of Historic Scale

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The New York Sun

Buoyed by low interest rates and a decline in crime, New York City is in the midst of a historic construction boom on par only with the real estate rush that defined the early 1960s and the late 1920s, eras that gave birth to iconic city structures such as the Met Life Building and the Chrysler Building.


The trend is visible in city data and confirmed by the construction cranes planted at sites across the five boroughs. Mayor Bloomberg, who is being sworn in for a second term Sunday, will be able to count the widespread development as a key part of his legacy, analysts said.


The number of permits issued for new private residential building units issued citywide in 2005 is on pace to hit nearly 28,000, surpassing last year’s total by more than 10% and more than five times the amount issued a decade ago, according to the city’s Department of Buildings. Some city officials say that all told, the final tally of new residential units may reach as high as 35,000 this year. In 1999 there were 12,421 new units and in 2000 there were 15,050.


At this rate, the buildings department is set to issue more permits in 2005 for all types of construction citywide than at any time in its history, according to one buildings official, although the department can track data only since 1992.


The deputy mayor for development, Daniel Doctoroff, told The New York Sun yesterday, “I think we are in the midst of, arguably, the greatest building boom in probably the period since World War II. It’s important to note that it touches every sector of the economy and it’s also, I think, in its very early stages.”


While some complain that many of the new units are luxury condominiums for rich Manhattanites, administration officials and real estate analysts insist that the construction is booming across all five boroughs.


The executive director of the city’s Planning Commission, Richard Barth, said: “It has been an incredible year housing-wise in the city. What is unique is in the past it has been driven primarily by housing in Manhattan. But in the past few years, it has been across the city – Brooklyn, Queens, and the Bronx.”


Mr. Barth noted that the city has gained more than 160,000 residents since 2000, bringing its total to more than 8.2 million, a record high. He also cited low interest rates, a healthy economy, improving quality of life, and a decreasing crime rate as factors contributing to the building boom.


Mr. Barth said the trend in housing growth is likely to continue due to zoning changes enacted and infrastructure investments made by the city in the last few years. He named the changes to the Williamsburg/Greenpoint section of Brooklyn, downtown Brooklyn, and the Hudson Yards area on the West Side of Manhattan as examples.


Mr. Doctoroff listed a series of highly touted future projects he hopes will make headway in 2006, including the westward extension of the no. 7 subway line, $9.9 billion of new construction near ground zero in Lower Manhattan, a mega-mall at the site of the Bronx Terminal Market, $5 billion to $6 billion worth of development projects in Flushing, commercial development in downtown Brooklyn, and new stadiums for the Yankees and the Mets. He said he hoped the 22-acre Atlantic Yards project slated for Brooklyn, which includes a basketball arena for the Nets and more than a dozen office and residential towers, would break ground before the end of 2006.


Many of the projects cited by Mr. Doctoroff and supported publicly by Mayor Bloomberg have angered local residents, who among other complaints, feel the administration’s strategy favors big developers over the desires of the local neighborhoods.


But Mr. Doctoroff said the city’s aggressive development strategy, along with a strong economy, is behind the housing boom.


“The economy is providing a favorable wind behind our backs. It’s an approach to growth that is giving confidence to people who are willing to make an investment. The administration’s approach is for the public sector to set the table, to create the conditions that enable the private sector to do what it does best,” he said.


More than half of this year’s residential construction activity in Manhattan was clustered south of 14th Street, according to the president of a real estate publishing and information company, Yale Robbins.


“You have to go back to the early 1960s to see the last time there was really substantially higher numbers than we are seeing today,” Mr. Robbins said.


But Mr. Robbins said the housing boom is not limited to Manhattan, or the neighborhoods below 96th Street that Mr. Robbins terms “the luxury housing market.”


“The biggest change in these numbers is the projection of tens of thousands of units in the outer boroughs. The prices have reached the point where the market justified building substantial new, unsubsidized apartments in the outer boroughs,” Mr. Robbins said.


A senior fellow at the Manhattan Institute who specializes in development, Julia Vitullo-Martin, said that the size of the current building boom is probably rivaled only by the early 1960s, when zoning changes were enacted that spurred developers to build to avoid stricter rules, and 1928, at the peak of the Roaring 20s.


“The vulnerable, more fragile areas in the outer boroughs that haven’t seen investment in decades are now getting it,” Ms. Vitullo-Martin said, noting Bushwick, East New York, and parts of the Bronx. “The term ‘inner city’ sounds old-fashioned. We don’t even have that idea in New York anymore.”


Ms. Vitullo-Martin added: “Manhattanization is usually a pejorative term, but I regard it as a good term because it means investment and vitality and density, and that’s good.”


In November, the New York Building Congress, a construction and real estate trade group, predicted that construction spending in New York City would reach a record $18.4 billion in 2005. Yesterday, the president of that organization, Richard Anderson, put that number in context. “In terms of dollar volume, the next year and beyond will be the largest in the history of the city of New York,” Mr. Anderson said. “In terms of actual number of square feet being built, it’s hard to compare, but it is certainly way up there.”


Mr. Anderson added that the building boom has put upward pricing pressure on some commodities, like concrete and steel. “There is escalation involved, but we are not sure how much. When you have a very high demand, and the supply of certain things are limited, the cost will go up,” he said. “So far, there are enough cranes to go around.”


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