Tariffs have dominated the headlines and terrified Wall Street, but the city’s biggest general contractors insist they’re not feeling the pain.
“I haven’t paid a tariff yet,” boasted Bernard Ruf, president of Broadway Builders, which ranked 12th in TRD’s annual count of the city’s top construction firms. It has 1.5 million square feet under development.
“Right now, it’s still just a discussion,” echoed Eli Weiss of Joy Construction, which took 10th place with over 1.8 million square feet.
“We don’t know where it’s going to land — that’s the reality,” he said.
Construction execs stressed that development timelines stretch across years, and Trump’s trade policies are both recent and ever-changing.
Currently, there’s the 25 percent tariff on steel and aluminum that took effect in March, the matched levy on Canadian lumber, the universal 10 percent import tax that hit April 5 and, of course, the escalating trade war with China.
But it’s anyone’s guess what will come in 90 days, let alone tomorrow. So it’s impossible to gauge whether import taxes levied last month will affect new filings that won’t break ground until 2027.
That’s not to say New York City development is humming along. In fact, most contractors said developers are struggling to put deals together — same as in 2023 and 2024.
A few of the reasons: still-elevated interest rates, higher labor and materials costs and a persistent bid-ask spread.
“We see that developers are eager to start new projects, but still reluctant to commit to these projects,” Philip Danser of Leeding Builders Group, an affiliate of AECOM Tishman, wrote in an email.
Resi reawakens
Even if development didn’t experience the hoped-for snapback, it hasn’t stalled out.
LBG, which took second place in TRD’s latest ranking, has a little over 4 million square feet in the works — a jump from 2023. Monadnock Construction — the first-place winner with 4.3 million square feet — maintained its pace year-over-year.
For those building, the hot ticket is residential: both rentals and condos.
After the expiration of tax abatement 421a in 2022, effectively no multifamily was going up and developers specializing in the asset class made the pivot to for-sale apartments. But 421a’s extension and last year’s implementation of new tax break 485x reinvigorated rental development.
“It absolutely did — just having that certainty on the legislation, even if it’s not perfect,” Weiss said.
One major drawback: 485x also includes wage requirements that rise for buildings with 100 units or more. Developers, in response, have been opting for 99-unit projects.
LBG is breaking ground on one such building in Manhattan later this year. Danser also projected that a 421a project in Long Island City, set to deliver 500 apartments, would kick off in 2025.
“The introduction of 485x has helped to encourage new residential development,” Danser said.
“But it’s generating less developer interest and much smaller projects versus the predecessor 421a.”
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Office-to-resi readies
Another alphanumeric gubernatorial gift last year was 467m — an incentive to motivate office-to-residential conversions.
Under the year-old program, developers can lock down a 35-year tax exemption if they commit a quarter of a building’s units to households making 80 percent of the area median income and 5 percent to those making up to 40 percent of the AMI.
The incentive made New York’s largest project of 2024 — Metro Loft and David Werner’s conversion of the Pfizer building — a definite go, according to Metro Loft principal Nathan Berman. He said others would likely follow.
LBG broke ground on 222 Broadway, another monster office-to-resi conversion in February. TPG Real Estate and GFP’s Jeff Gural filed plans for the FiDi project in August 2024, a few months after Albany greenlit 467m.
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HUD hurdles
Though most contractors refused to engage in tariff fearmongering, affordable builders did acknowledge that the federal government’s cuts to the Department of Housing and Urban Development are worrisome.
“It’s very concerning, very concerning,” Weiss said.
The Trump administration is expected to release a budget proposal in mid-May that would slash spending on HUD’s affordable housing and homelessness programs. It has already tied up at least $60 million in funding intended, largely, for affordable housing developments, according to the AP. The White House also proposed axing half of the housing agency’s workforce, which would further delay things.
But the future is fuzzy as ever.
“We don’t have specifics,” Monadnock principal Alphonse Lembo said. “Anecdotally, yes, developers, I think, have concerns that programs might not be the same in the future.”
Still, contractors insist they’ll be able to weather whatever comes their way. It’s just how they do business.
“They say that construction is the closest thing to war in peacetime,” Weiss said. “We’re an industry that’s built to bounce back.”
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