Friday, April 7, 2017

Urbanism: Who Benefits From New York`s Construction Boom?

(Drivebycuriosity) - Whether you live in New York City or you are visiting the metropolis you will notice a lot of construction. At almost every block some new tower is growing up into the sky.  In the West you can see the birth of Hudson Yards, a large-scale redevelopment program with more than a dozen skyscrapers (wiki), on the Lower East Side you can watch the creation of Essex Crossing, another huge building complex (wiki), and all over Manhattan a lot of very slim residential towers are getting squeezed into the skyline.

The construction boom is a response to a high demand for flats in a glamorous metropolis and fueled by the recovering global economy.  People from all over the world want to live - and often own property - in a glitzy city. New York city is home to some of the most important museums, opera houses, theaters, art galleries and owns a massive cultural infrastructure. There are myriads of nightclubs, cafes, bars, cinemas and other leisure places.  Residents & visitors find myriads of groceries, shops for clothes, furniture, kitchen equipment - or anything  else. New York City is full of restaurants which cater to almost any taste and serve every cuisine of the world in different varieties. The construction boom gets supported by technological progress. Advances in materials, engineering, architecture and other areas make it possible to construct very high & slim buildings  and curb the construction costs.

New York´s construction boom is met with skepticism. For instance the New York Times claimed that construction will drive the already high rents in New York City even higher (nytimes). But they were wrong. In 2016 rents in New York City were falling - and in other cities which also have a construction boom (urbanism). This isn`t surprising. The construction boom is satisfying the climbing demand by lifting the supply of flats significantly.

Prices and rents for apartments are closely connected with the land on which they are built. If the land (real estate) prices rise, apartment prices will rise too. And land prices rise when the demand for land climbs as long as the supply stays unchanged, for instance in Manhattan. But the new  towers don´t need much extra land.  Many of the new skyscrapers are squeezed between the existing buildings. They are slim structures and rise high into the sky. They expand the supply of apartments by transferring air space into flats. And some projects - like Hudson Yards or Essex Crossing - are using land which has been unused for decades.

And there are more advantages for New York`s residents.The inflow of new residents - often very affluent - lifts the tax income of New York City (property taxes, sales taxes). So the city administration receives more money and can use it for social programs, schools, hospitals & the infrastructure like streets, buses, subways etc.

And there is another positive side effect: The new construction boom is raising the density of New York, meaning the number of people per square mile. Studies show that a rising density fosters economic growth because it hikes the productivity of the residents  ( newyorkfed  vox   bloomberg). "Packed city centers are correlated with economic growth, talent levels, and diversity" notices the city expert Richard Florida  (citylab). "When people cluster more tightly together, they become more productive", explains Bloomberg commentator Noah Smith (bloomberg).

This process will foster the social & cultural infrastructure (health facilities & services,
theaters, art galleries, nightclubs, cafes, bars, cinemas, shops etc) and will make the city even more attractive. I welcome the new buildings and I am looking forward to a New York City which will be even more fascinating than today. 

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