Greater NYC Area Leads U.S. in Retail Construction
- May 01, 2019
While construction continues to rage across New York City, activity in the retail sector has gone on the downswing, just as it has across the U.S., according to a new report by the New York Building Congress. However, buoyed by high levels of activity in Northern New Jersey and Long Island, the Greater New York area holds the distinction of being the largest metro region for retail construction in the country.
Changes in the trajectory of retail construction in New York City became evident in 2015. As non-residential construction continued to rise, jumping from $14.6 billion to a whopping $27.8 billion between 2015 and 2018, retail construction dropped from $1.9 billion to just $773 million. Yet, as e-commerce and a glut of new construction persist in plaguing retail across the country, New York City still stands as a key retail destination.
“New York City’s economy continues to produce new jobs and attract record numbers of tourist—both key drivers of retail growth,” Carlo Scissura, president & CEO of the New York Building Congress, said in the report. “Despite worries following the closing of some major retailers, I’m confident that New York businesses are flexible and resilient enough to lead the way. There’s no doubt: New York remains the most important city for retailers in the United States.”
Suburbs Take the Torch
New York City construction activity may have dropped over the last few years, but the Greater New York area leads the nation, due in no small part to booming activity in Northern New Jersey and Long Island, which closely follow Houston on the list of the top three markets leading construction activity in the U.S. A total of 7.9 million square feet of retail space is under construction in Northern New Jersey and Long Island.
“The most surprising finding (of the report) is the growth of suburban retail in the New York City metro area as a whole, despite the fact that retail construction is down nationally,” Scissura told Commercial Property Executive. Together, New York City and its suburbs saw $1.3 billion in retail construction in 2018, marking a year-over-year increase of 4 percent.
Local Trend, National Trend
There is a certain pattern of characteristics in New York City retail construction today, per the report, and it mirrors that found nationally. Among the trends is the positive impact the growing number of large, mixed-use projects is having on retail. These live-work-play developments incorporate all facets of retail, mitigating the negative impact of struggling malls. One of New York City’s most prominent examples of the happy existence of retail within mixed-use destinations is The Shops & Restaurants at Hudson Yards, the 1 million-square-foot retail hub within the newly opened, 28-acre Hudson Yards development.
NYBC also noted in its report that in New York City and across the U.S., renovations are outpacing new construction and developers are making experience-centric retail space a priority in their projects. And finally, big-box store closures are a common theme; New York City saw its first decline in national-brand stores in a decade in 2018, with the number of stores dropping to 7,849 from 7,876 in 2017.
Overall, all signs point to a positive future for New York City retail. “The four trends we identified in the report are likely to continue and New York City is in a position to capitalize on those trends in the next five to 10 years,” Scissura told CPE.