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Expected 421-a Successor Enactment Fueled NYC Building Boom

Source: US Census Bureau Source: US Census Bureau

NEW YORK CITY— New York Building Congress president and CEO Carlo A. Scissura believes that developers bet on New York State passing a new 421-a tax incentive program this legislative session that sparked a dramatic rise in new residential building permits in the first quarter of this year.

While the “Affordable New York” or successor to the 421-a legislation, did not get enacted until the 2018 state budget passed on April 10, Scissura tells Globest.com that he believes developers banked on the 421-a tax break and filed building permits with the city in the first quarter.

The New York Building Congress reports that building permits filed in the city during the first quarter of this year were the highest in the last 10 years and three times higher than permits recorded during the first quarter of 2016.

“The numbers seem to confirm that the drop in 2016 was largely the market taking a breather after the surge in applications prior to the expiration of 421-a,” Scissura says. “We now seem to be in a period of renewed vigor and investor confidence given the relative strength of the overall economy and the recent agreement on Affordable New York, the successor program to 421-a.”

He points to developer’s anticipation of the new 421-a program as a “significant part” of the impressive spike in residential building permits the first three months of this year.

According to the organization’s analysis of US Census Bureau data, the New York City Department of Buildings authorized construction of 6,343 residential units in the first quarter of 2017. In the first quarter of 2016 the DOB issued permits for 2,158 units. It should be noted that the 421-a tax incentive expired on Jan. 15, 2016.

In 2015 when builders rushed to file plans prior to the expected expiration in early 2016, 6,183 units were authorized in the first quarter. For the full year, the DOB authorized 16,269 housing units in 2016—nearly 40,000 units shy of the 56,183 units authorized in 2015.

The Building Congress reports that the 2017 first quarter building permit totals signals the best start for the residential development and construction sectors since 2007, when 7,264 residential units were permitted for construction across the five boroughs.

Scissura notes that another good sign for the New York City residential sector is the tremendous amount of activity took place in spite of the “uncertainty” that exists in Washington, DC.

“For those anxious that the boom times in the residential construction sector might have ended in 2015, the data from the first three months of 2017 should elicit a huge sigh of relief,” Scissura says.

Brooklyn got off to the quickest start in the first three months of this year with 2,097 permits, or 33%, of all permitted units citywide. Manhattan came in second place with 1,486 units, followed by Queens at 1,434, the Bronx at 1,124, and Staten Island with 202 units authorized for construction.

Scissura, the former president of the Brooklyn Chamber of Commerce, says that investors continue to flock to Brooklyn, but notes he is also pleased that Queens and the Bronx posted strong showings as well in the first quarter.

Looking forward, he adds, “It will be interesting to see what type of impact Affordable New York will have on the boroughs moving forward, especially in neighborhoods such as Astoria, where the Durst Organization recently announced it is moving ‘full steam’ ahead with its 2,400-unit Hallets Point project.”

 

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