Northeast

Cities in the Northeast have seen a decline in construction starts over the first part of the year, continuing a pattern that we have seen over the last few years.

Construction spending here has still not returned to its pre-pandemic levels, and the overall region remains hampered by a high cost of living. Housing shortages are more pronounced here than anywhere outside of California. Much of the residential construction that’s happened over the last few years has been high-end, luxury developments that are not meant to be widely affordable. Thanks to remote work, people have begun moving to smaller cities where they can stretch their salaries further. This has presented the region with its own set of problems.

City centers in the Northeast are often blocks of office buildings with restaurants and light retail that cater to office workers. Remote work has caused office vacancy rates to jump to as much as 20% in some of these cities, and the corresponding drop in foot traffic has left many downtown businesses unable to survive. This is despite a high return to work in metro areas of about 70% – the highest in the nation. This has presented cities across the region with a dilemma, as these offices are often too large to be converted into another use but are also too expensive to be torn down.

Many of these buildings have leases that are up for renewal in 2025 – leases that are unlikely to be renewed. This represents an opportunity for the market, as it will pave the way for newer developments and more affordable housing. Below, we have provided more detail about the state of the market in the Northeast.

* Other structures include religious buildings, amusement, government communications, and public recreation projects.
Source: BuildMarket

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