NYC New Building Filings in Q2 Were Down 30% YOY

New York City's real estate market is witnessing a significant 30% drop in new building filings during Q2 2023, as per the latest report from the Real Estate Board of New York (REBNY). While this represents a slight uptick from the previous quarter, it underscores a notable slowdown compared to Q2 2022.

Numbers Unveiled

REBNY's analysis of filings submitted to the city's Department of Buildings in Q2 reveals 374 new applications encompassing around 6 million square feet of new construction. This amount signals a 41% decrease in new building square footage in comparison to Q2 2022. While the filings were 30% fewer than Q2 2022, they were up by 7% from the prior quarter's 350.

Factors Behind the Slowdown

Keith DeCoster, REBNY's director of market data and policy and report author, identifies a multifaceted slowdown, attributing it to uncertain financing costs and the expiration of the 421-a tax incentive program in June 2022. These elements have collectively contributed to the deceleration in new development.

Real Estate Sectors

Around 60% of the Q2 filings were allocated to multifamily structures, while office and industrial buildings comprised roughly 30% of the total. However, the study reveals a sharp 60% drop in proposed units compared to Q2 2022, particularly evident in residential developments, reflecting a historical low akin to 2009 levels.

Looking Ahead

DeCoster warns that the challenges might not dissipate quickly. The interplay of factors, including lending restrictions and concerns over future demand, suggests a potential delay in the recovery of new development activity.

REBNY's findings align with those of Dodge Construction Network, a New Jersey-based research firm, which reported a 7% decrease in U.S. construction starts in July on a year-to-date basis. Importantly, residential construction started a 17% decline year-over-year in the same month, revealing a broader industry shift influencing construction trends beyond NYC.