New York City, October 3, 2025
News Summary
Federal officials have paused disbursements tied to the $16 billion Gateway tunnel amid budget disputes and an administrative review of DEI-related spending, leaving billions held and threatening schedules and thousands of construction jobs. Work continues in the short term but mounting uncertainty could delay the Hudson River rail link and ripple through procurement and hiring. Separately, a 20-story Bronx public housing tower partially collapsed after a suspected boiler explosion with no reported injuries. New York City’s construction sector remains below pre-pandemic employment levels and Manhattan is the world’s most expensive building market, adding cost and timeline pressure.
Breaking: Federal pause snarls funding for Gateway tunnel; Bronx tower corner partially collapses after suspected boiler blast; New York City construction sector remains below pre-pandemic levels while Manhattan ranks as the world’s costliest building market
Federal pause threatens a major $16 billion rail link
The Gateway tunnel project (new Hudson River tunnel linking New York and New Jersey) has an estimated cost of $16 billion. Federal officials have paused disbursements tied to that project amid a wider budget dispute and an administrative review of spending tied to diversity, equity and inclusion rules and a government shutdown. The pause was described by federal budget officials as a review that leaves billions in hold for projects across the city while officials sort through compliance and budgeting questions.
Work on the tunnel was continuing for the short term because of the way it is budgeted, but uncertainty has mounted. Thousands of construction jobs and commuters across the Northeast could be affected if the funding holdup stretches beyond the short term. The Gateway Development Development Commission said it is focused on keeping the project on scope, schedule, and budget and called the action a pause in disbursements.
Federal messaging included a post by the White House budget director that the administration is withholding roughly $18 billion from New York City infrastructure projects because of unconstitutional DEI principles. The Department of Transportation outlined that it was reviewing spending because of DEI issues and because of the shutdown, creating a holdup for billions eventually needed to finish early phases of Gateway and the Second Avenue Subway. The Metropolitan Transportation Authority said the administration is reviewing compliance with rules and signaled concern that explanations for delay appeared improvised.
State and local officials have pressed for continuity. One state governor said he was confident in working with the federal government to keep Gateway moving forward and called the project one that should be above politics. Another state executive said every local resident should be outraged by the threat to the tunnel. A Senate leader framed the dispute as part of broader budget negotiations that could be resolved if lawmakers reach a deal. Construction trade leaders warned that even the threat of withheld funds can ripple through hiring, procurement and scheduling decisions.
Bronx partial collapse tied to likely boiler explosion
A corner of a residential tower at a public housing complex in the Bronx partially collapsed after a likely boiler explosion. The affected structure is a 20-story building in the Bronx within the Mayor John Purroy Mitchel Houses complex. The brick chimney running the 20-story length of the building crumbled after an explosion at 8:10 a.m. The chimney was connected to the building’s boiler room, which was undergoing a routine test when the explosion occurred.
No injuries or fatalities were reported. City emergency management inspectors examined the foundation and went door-to-door to ensure apartments were structurally sound. Teams planned demolition of what remained of the chimney to access the building’s basement. Gas service for all 11 structures in the Mitchel Houses complex was turned off on the morning of the incident as officials inspected systems. City officials noted the building complex was built in 1966 and is part of an aging public housing stock that has long-scheduled capital work. The Mitchel complex will need nearly $717.5 million worth of changes through 2044 and building heating renovations are on the Mitchel change list with an estimated cost of almost $116.6 million over the next two decades.
Construction jobs, spending and high costs in New York City
The construction industry in New York City remains smaller than it was before the COVID-19 pandemic. In 2024 New York City averaged 143,100 construction jobs, an 11% decrease from 161,300 jobs in 2019. While other parts of the state recovered, New York City’s slower recovery means the state remains 4% below its 2019 construction employment levels and is the second-slowest recovery of any state behind West Virginia. The main factor in sluggish hiring is lagging demand for non-residential construction, according to the state comptroller’s report that cites state labor data and information from the New York Building Congress.
Residential spending surpassed 2019 levels by 2023, reaching $22.8 billion while nonresidential spending was $22.2 billion in 2023, which is 3% lower than in 2019. Non-residential projects were projected to have fallen further in 2024 by another $572 million. Analysts expect nonresidential to rebound in the current year and grow further in 2026, helped partly by lowered interest rates and several upcoming megaprojects including the Port Authority’s $10 billion rebuild of its Midtown bus terminal and the Metropolitan Transportation Authority’s $68 billion capital plan for 2025 through 2029.
Manhattan is the most expensive building market on the planet
A global consultancy found New York City is the most expensive construction market on the planet with cost per square foot for new buildings averaging $534. Comparable per-square-foot figures include San Francisco $512 per square foot, Los Angeles $445 per square foot, Tokyo $431 per square foot, London $500 per square foot and Amsterdam $296 per square foot. Common industry explanations for high costs include higher land and financing costs, added complexity and customization of marquee projects, labor costs, and permitting and logistical hurdles unique to dense urban centers.
Local labor markets and rules play a role. The city’s construction hourly wages averaged $39.44 compared with $30.73 nationwide according to a recent survey. Unionization in the metro construction industry is higher than the national rate and prevailing wage rules and project labor agreements on many projects can institutionalize higher labor costs. Other structural factors such as complicated permitting, stricter codes, specialized trades driven by sustainability mandates, and limits on typical heavy equipment also add to price pressures.
Industry context and near-term outlook
Major employers and private equity are investing in construction technology sub-sectors with firms such as KKR, GrowthCurve and Main Capital among investors. Several events and industry gatherings are already scheduled including an event on October 29-30, 2025 at Convene Brookfield Place, 225 Liberty, New York and another event on February 22-25, 2026 at JW Marriott, Orlando Grande Lakes. Industry watchers say a combination of project pipelines, potential federal funding changes, and an aging and constrained labor pool will determine hiring and project pace in coming years.
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What this means
If the federal pause on disbursements extends beyond the short term, project schedules for Gateway and other large transit and public works projects could face delays and cost pressure that would ripple through the construction market and local economies. A partial collapse tied to a boiler test in the Bronx underscores the vulnerability of aging housing infrastructure and the ongoing need for major capital investment in public housing. High local construction costs and a smaller workforce than before the pandemic will continue to shape which projects move forward and how quickly they can be built.
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Q: How much is the Gateway tunnel estimated to cost?
A: The Gateway tunnel project (new Hudson River tunnel linking New York and New Jersey) has an estimated cost of $16 billion.
Q: When are the upcoming industry events noted in the materials?
A: An event is scheduled for October 29-30, 2025 at Convene Brookfield Place, 225 Liberty, New York.
Q: Is there a later industry event scheduled?
A: An event is scheduled for February 22-25, 2026 at JW Marriott, Orlando Grande Lakes.
Key features at a glance
| Feature | Detail |
|---|---|
| Gateway tunnel cost | $16 billion; new Hudson River tunnel linking New York and New Jersey |
| Federal action | Pause in disbursements and review tied to DEI and shutdown-related budget matters; roughly $18 billion reported held from NYC infrastructure projects |
| Bronx incident | Partial collapse after likely boiler explosion at a 20-story building in the Mayor John Purroy Mitchel Houses complex; no injuries reported |
| Construction jobs (NYC) | 143,100 average in 2024, 11% below 2019 level of 161,300 |
| Cost per sq ft (Manhattan) | $534 average, highest in global comparison |
| Upcoming events | October 29-30, 2025 at Convene Brookfield Place, 225 Liberty, New York; February 22-25, 2026 at JW Marriott, Orlando Grande Lakes |
| Site prompts observed | Verification and registration messages including Nearly there! A verification email is on its way to you. Please check your spam or junk folder just in case. |
Copyright and interface snippets observed in source materials include site notices and copyright lines attributed to various publishers and platform providers.
Deeper Dive: News & Info About This Topic
Additional Resources
- Politico: Federal pause snarls funding for Gateway tunnel
- Wikipedia: Gateway Program
- ENR: Partial apartment building collapse in NYC possibly triggered by boiler
- Google News: Bronx Mitchel Houses boiler explosion
- Crain’s New York: NYC construction jobs still below pre-pandemic levels
- Encyclopaedia Britannica: New York City construction (search)
- Commercial Observer: New York City construction labor costs 2025
- Google Scholar: Manhattan construction costs
- Syracuse.com: New York’s ban on gas equipment in new homes is coming
- Google Search: New York ban on gas in new homes
Author: Construction FL News
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