-- New York City growth outpaced the nation’s in 2006 --

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New York City’s residential construction boom is part of a national revival in central-city construction, according to Economic Notes, a quarterly publication released today by New York City Comptroller William C. Thompson, Jr.

According to the Comptroller’s Office analysis, New York City is experiencing its biggest residential construction boom in three decades. The City issued building permits for a total of 62,526 new housing units in 2005 and 2006. The 2-year total is the most since 1971 to 1972. Although the number of new housing permits dropped 14 percent in the 4Q06 from 4Q05, they remained at a high level into 2007.

The analysis suggests that housing development in the nation’s largest central cities has exhibited a resurgence during this decade and that New York has had one of the strongest revivals. The 25 largest American cities have increased their share of national housing permits from 6.5 percent in 1997 to 9.8 percent in 2006.

The housing construction boom has been most pronounced in the oldest and densest of these cities. Older cities, which were already among the 25 largest in 1940, increased their share of large-city housing permits from 41 percent in 1997 to 56 percent in 2006.

New York City has not only outperformed the national trend, but that of the large-city group as well. In 1997, the City accounted for 9.6 percent of the new residential units authorized in the 25 largest cities. By 2006, its share had grown to 17.2 percent.

Two cities closest to New York City in size, Los Angeles and Chicago, have had construction revivals that closely resembled New York’s pattern. Between 1997 and 1999, Chicago issued about 4,000 residential permits per year; that number rose to 10,350 per year between 2004 and 2006. Residential growth in Los Angeles was even greater, with 3,200 permits issued between 1997 and 1999, and 12,500 between 2004 and 2006.

New York City economy

The Comptroller’s report also shows that Real Gross City Product (GCP), a measure of the overall City economy, grew 3.6 percent for the full year of 2006, the third consecutive year of solid growth for the City’s economy. Economic growth, however, decelerated during the course of the year. The City’s GCP estimated growth was 1.9 percent for 4Q06, the weakest quarter of 2006.

“The national economy, which grew slowly during the last nine months of 2006, has begun to act as a drag on the local economy,” Thompson said. “Nationally, growth has been weak due to a declining housing market and record trade deficits.”

Thompson continued: “Despite the unsettled housing and mortgage markets, we do not anticipate a recession during 2007. The economy, however, has entered a period of heightened uncertainty, and fiscal planners will need to monitor future economic data carefully.”

Economic Notes also includes the following New York City data:

• New York City added 62,200 payroll jobs during 2006, the most in six years.  However, the pace of job growth, both nationally and locally, slowed considerably during 4Q06.

• Personal income taxes withheld from paychecks rose 14.6 percent in 4Q06, compared to the three previous months. In 4Q05, income tax withholdings increased 15 percent. Income tax withholdings typically jump in the fourth quarter due to the year-end bonuses and high seasonal employment.

• New York City’s unemployment rate fell to 4.4 percent in 4Q06, its lowest level in 36 years. The number of unemployed City residents declined by 12,300 during the 4Q06.

• The overall Manhattan commercial vacancy rate fell to 6.7 percent, the lowest since 2Q01, according to Cushman & Wakefield. The average commercial asking rent in Manhattan rose to $50.56 per square foot in 4Q06.

You can view the report at www.comptroller.nyc.gov.

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