New York City Posts $1.4B Loss in Tax Revenue

The real estate and construction industries are juggernauts for New York City’s economy. Together, those industries generate tax revenue that funds the city’s public programs and creates middle-class jobs. In fact, the real estate industry alone accounts for more than half of the tax revenue needed to run New York City.

At the outset of COVID, the Real Estate Board of New York began tracking key economic indicators to monitor the health of the city’s economy in the wake of the public health crisis. These analyses have been sobering. It found that New York City and state lost $1.4 billion in tax revenue due to significant declines in real estate market activity.

New Building Filings: Historical Snapshot

In drilling down on the data, REBNY’s records show the number of new construction filings in 2020 is New York City’s lowest since the wake of the Great Recession. There were 1,187 new building filings through the first three quarters of 2020, representing a nearly 22% decline when compared to the first three quarters of 2019, according to REBNY’s new building construction pipeline report. Moreover, this is the lowest year-to-date number since 2010, when there were 1,009 filings through the first three quarters.

New Building Filings: 2020 Quarterly Snapshot

In the third quarter of 2020, there were 441 new building job applications in New York City, a 14.25% increase from the previous quarter and a 22.5% increase year-over-year. The applications combine for a total proposed construction floor area of 7.2 million square feet and would include 5,456 dwelling units.

Key Takeaways: Borough Breakout

While Brooklyn had the largest number of new building job application filings of any borough with 128, it was the only borough to experience a year-over-year decline in filings at -0.78%. Queens was in the number two spot with 119 filings at a Y-O-Y increase of 12.3%.

Staten Island experienced the largest increase in number of filings at 101 at a 55.4% change Y-O-Y, but also accounted for the smallest portion of the proposed construction square feet at just 4.3%.

The Bronx recorded 69 filings with an increase of 53.3% Y-O-Y, while Manhattan had just 24 filings, at an increase of 60% Y-O-Y.

New York City commercial real estate transactions dropped significantly in the first half of the year, with 1,229 recorded transactions totaling $10.5 billion, according to REBNY. This represented a 32% decline in the volume of transactions and a 54% decline in total consideration compared to the first half of 2019. These figures represent all-time lows since REBNY’s reporting began in 2015.

REBNY first created a report to track real estate transactions and the impact of the crisis on the city and the state’s ability to generate taxes needed for essential government services. The launch of REBNY’s newest report, the quarterly new building construction pipeline report, examines the new building job application filings submitted to the New York City Department of Buildings.

This type of analysis helps to better understand the state of development and its subsequent impact on the construction industry in the city. These numbers indicate policymakers must act quickly to generate more construction activity and create tens of thousands of jobs to help advance the city’s economic recovery.