Sat. Feb 24th, 2024
alert-–-death-of-the-construction-crane:-skyscraper-building-equipment-touted-as-sign-of-thriving-economy-disappears-from-nyc-and-chicago-skyline-as-office-values-tankAlert – Death of the construction crane: Skyscraper-building equipment touted as sign of thriving economy disappears from NYC and Chicago skyline as office values tank

Construction cranes are disappearing from the skylines of major US cities, in another sign of the depressed commercial real estate market and dearth of new construction.

New York and Chicago have been the hardest hit, with the number of cranes in each city down 69 percent since February of 2020, just before the onset of the COVID-19 pandemic, according data reported by Bloomberg. 

The enduring popularity of remote work and higher borrowing costs have both put a damper on office construction projects, with several major projects put on hold until conditions turn more favorable.

The overall crane count decreased 10 percent last year from March to September in the 14 US and Canadian cities surveyed by construction-advisory company Rider Levett Bucknall.

‘As interest rate continue to rise, private-sector construction is showing signs of slowing down,’ the firm said in its latest biannual report, issued in October.

Construction cranes are disappearing from the skylines of major US cities, in a sign of the depressed commercial real estate market and dearth of new construction

Construction cranes are disappearing from the skylines of major US cities, in a sign of the depressed commercial real estate market and dearth of new construction

Cranes are seen building skyscrapers in New York in 2019. The number of cranes in Manhattan has dropped 69 percent in the past four years

Cranes are seen building skyscrapers in New York in 2019. The number of cranes in Manhattan has dropped 69 percent in the past four years

The office market has been hit particularly hard, with property prices falling 22 percent in January from one year earlier, according to real estate analytics firm Green Street. 

The depressed commercial property market has hit developers, construction firms, and the companies that serve office workers in central business districts.

It has also sent shockwaves through the financial sector, hitting some regional banks particularly hard.

New York Community Bancorp stock plunged to near a 27-year low this month, after the lender posted unexpected commercial real estate loan losses and slashed its dividend.

For workers, the rise of hybrid and remote work has led to savings in time and money on commuting, and shifted spending away from downtown business districts and closer to home. 

For city leaders, an abundance of cranes has often been touted as a visible sign of economic growth.

Former Chicago Mayor Rahm Emanuel once praised the number of cranes in the city as a sign of ‘economic vitality, vibrancy and versatility.’ 

In Chicago, there was only one groundbreaking of an office building project last year, while there were none in New York City. 

JPMorgan’s new headquarters building, set to open in 2025, will be Manhattan’s largest office tower debut in several years.

Other cities that have seen significant declines in the number of construction cranes from early 2020 levels include San Francisco (-66 percent), Portland (-50 percent), Las Vegas (-47 percent), Los Angeles (-36 percent) and DC (-28 percent).

On the other hand, Honolulu, Seattle, and Boston have seen the number of cranes increase from four years ago, bucking the trend. 

Last month, the office vacancy rate in the US reached a 40-year high of 19.6 percent, according to Moody’s Analytics.

The newest record slightly passed the highest rate on record which was recorded at 19.3 percent in 1986 and 1991. 

Last month, the office vacancy rate in the US reached a 40-year high of 19.6 percent, according to Moody's Analytics.

Last month, the office vacancy rate in the US reached a 40-year high of 19.6 percent, according to Moody’s Analytics. 

The sun sets on Hudson Yards and the Empire State Building in New York City in October. Manhattan had no office building groundbreakings last year

The sun sets on Hudson Yards and the Empire State Building in New York City in October. Manhattan had no office building groundbreakings last year

Buildings on the skyline are seen on January 17, 2024 in Chicago, Illinois. In Chicago, there was only one groundbreaking of an office building project last year

Buildings on the skyline are seen on January 17, 2024 in Chicago, Illinois. In Chicago, there was only one groundbreaking of an office building project last year

The lowest percentage of vacant offices happened in 1976 at approximately 6 percent. 

San Francisco hit a record high of 27.1 million square feet of vacant commercial space, as tech workers continue to embrace remote work at high rates.

Chris Roeder, executive managing director at Jones Lang LeSalle in San Francisco told Al Jazeera: ‘Nearly 80 percent of the space in downtown San Francisco is office space, unlike New York or most other cities, which have more homes.’ 

Recently, Washington DC, managed to surpass San Francisco with the highest share of office buildings with bank loans at risk of default, as government employees continue to work from home following the pandemic.

Loans of concern on offices around D.C. reached 72 percent in the third quarter, unseating San Francisco’s 71 percent, according to real estate data firm Trepp.

For reference, the rate for the capital region was 38 percent at the end of last year.

One of the major factors is federal employees’ hesitancy to return to in-person work. Nearly 50 percent of employees in D.C. worked remotely in 2021, Census data shows. 

In his early 2022 State of the Union speech, President Joe Biden said it was time for Americans to return to work and ‘fill our great downtowns again.’  

‘We’re doing that here in the federal government. The vast majority of federal workers will once again work in person,’ he added.

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