The report says that at $15 billion, public sector projects, which include expenditures by the city, state and federal governments as well as agencies like the Port Authority of New York and New Jersey and the Metropolitan Transportation Authority, accounted for around half all construction spending last year. On the private side, non-residential construction spending--including office, institutional, sports and entertainment venues--hit $10.9 billion, up from $8.9 billion in 2007, while residential declined to $5.9 billion from $6.1 billion in '07.
NYBC president Richard Anderson tells GlobeSt.com the congress issued the report because, "we wanted to show what the benchmark was," and that "2008 was a very solid year."
Unlike most of the rest of the nation, New York construction activity held its own despite increasing economic challenges posed by a worsening recession. For example, according to a January report from McGraw Hill Construction, with an increase of 128% in spending, New York City was the only "top five" market for office construction to report an expansion of construction starts in that sub-sector--although the figure was greatly influenced by starts at the three towers of the World Trade Center site.
Still, looking back, Anderson says the final months of '08 marked the period when some very disquieting signs were emerging in certain sectors. By April of this year, when McGraw Hill Construction issued its Construction Outlook'09, Spring Update, for the nation, things were looking increasingly challenged. Starts for '09 had fallen by 15% to $463.1 billion year-to-date, and the national unemployment figures in the sector were approaching 21%. Seasonally adjusted figures from the New York State Department of Labor for April show that the state shed 25,400 construction jobs from the same period a year earlier.
"For 2009, we thought construction unemployment would be down by 30,000 jobs," says Anderson. Currently, the NYBC says the sector is down by around 22,000 jobs in New York City from its peak at 135,000.P>And, as the NYBC notes, residential permits and monthly state employment figures have been on a steady decline since late last year. Further, a number of large projects like the new Yankee Stadium and Citi Field, as well as the Bank of America tower at One Bryant Park, are essentially complete while others are in doubt. On top of that, the NYBC says that it's identified some 17 previously-announced projects that are now delayed.
Any chances of the delayed projects starting soon are subject to a number of factors surrounding each individual project. "It's one project at a time," says Anderson. He adds that "some depend on financing, some depend on costs or the impact of the new Project Labor Agreements."
In the upcoming May/June issue of Real Estate New York, sister publication to GlobeSt.com, Building Trades Employers Association president Lou Coletti says the PLAs are vital to managing construction expenses on individual projects. He notes that he's told his members if they don't accept agreement terms, there's the danger of project scale-back or even what he says is a rash of cancellations this year. "We stopped counting at $5 billion worth of work that had come to a complete stop," says Coletti.
That said, Anderson says the resumption of some stalled construction projects will depend on answers to a long-running question: "just how much of a market is there for what they're proposing to build." Dr. Sam Chandan, president of Real Estate Economics, told GlobeSt.com in April, "any sense of urgency that a developer needs to bring an office building on line has simply dissipated." He added, "A lot of people are taking a wait-and-see approach."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
