Construction cranes are disappearing from the skylines of major American cities, another sign of the depressed commercial real estate market and lack of new construction.
New York and Chicago are the hardest hit, with the number of cranes in each city falling 69 percent since February 2020, just before the outbreak of the COVID-19 pandemic, according to data reported by Bloomberg.
The continued popularity of remote work and higher financing costs have both put a damper on office construction projects, with several major projects put on hold until conditions become more favorable.
The total number of cranes fell 10 percent from March to September last year in the 14 U.S. and Canadian cities surveyed by construction consultancy Rider Levett Bucknall.
“As interest rates continue to rise, private sector construction is showing signs of slowing,” the company said in its latest half-year report. reportreleased in October.
Construction cranes are disappearing from the skylines of major US cities, in a sign of the depressed commercial real estate market and lack of new construction
In 2019, cranes can be seen building skyscrapers in New York. The number of cranes in Manhattan has fallen 69 percent in the past four years
According to real estate analysis agency Green Street, the office market has been particularly hard hit: real estate prices fell by 22 percent in January compared to a year earlier.
The depressed commercial real estate market has hit developers, construction companies and companies that serve office workers in central business districts.
It has also sent shockwaves through the financial sector, hitting some regional banks particularly hard.
Shares of New York Community Bancorp fell to a near 27-year low this month after the lender posted unexpected losses on commercial real estate loans and cut its dividend.
For employees, the rise of hybrid and remote work has led to savings in time and money on commuting, and a shift in spending from downtown business districts to closer to home.
For city leaders, an abundance of cranes is often touted as a visible sign of economic growth.
Former Chicago Mayor Rahm Emanuel once praised the city’s number of cranes as a sign of “economic vitality, vibrancy and versatility.”
In Chicago, there was only one groundbreaking office construction project last year, while in New York City there was none.
JPMorgan’s new headquarters, set to open in 2025, will be Manhattan’s largest office tower debut in years.
Other cities where the number of construction cranes has dropped significantly from early 2020 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 crane numbers increase from four years ago, bucking the trend.
According to Moody’s Analytics, U.S. office vacancy rates hit a 40-year high last month at 19.6 percent.
The latest record slightly surpassed the all-time high of 19.3 percent in 1986 and 1991.
According to Moody’s Analytics, U.S. office vacancy rates hit a 40-year high last month at 19.6 percent.
The sun sets on Hudson Yards and the Empire State Building in New York City in October. Manhattan had no groundbreaking office buildings last year
Buildings on the skyline are seen on January 17, 2024 in Chicago, Illinois. Only one groundbreaking office construction project took place in Chicago last year
The lowest percentage of vacant offices occurred in 1976, about 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 director of Jones Lang LeSalle in San Francisco, told Al Jazeera: “Almost 80 percent of the space in downtown San Francisco is office space, unlike New York or most other cities, which have more residential .’
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 after the pandemic.
According to real estate data firm Trepp, healthcare loans at DC-area offices reached 72 percent in the third quarter, surpassing San Francisco’s 71 percent.
For reference, at the end of last year the rate for the capital region was 38 percent.
One of the biggest factors is federal workers’ hesitancy to return to in-person work. Nearly 50 percent of DC workers worked remotely in 2021, Census data shows.
In his State of the Union address in early 2022, President Joe Biden said it was time for Americans to go back to work and “refill our great downtown.”
“That’s what we do here in the federal government. The vast majority of federal employees will return to in-person work,” he added.