For '09, construction starts totaled $815 million in January, $371 million in February, $320 million in March and $539 million in April before spiking to $2.04 billion in May. In contrast, monthly starts last year ranged from $712 million to $4.98 billion, and usually topped $1 billion. The Dodge data encompass all project starts, including new construction as well as alterations and renovations to existing structures, and reflect the value of each initiated project through the entire period of construction, according to the NYBC.
"The May numbers offer the first sign of encouragement for the construction industry in 2009," says NYBC president Richard T. Anderson in a release. "Of course, monthly fluctuations naturally occur, so we will be closely monitoring the numbers in the coming months to determine if May represented the first spark of renewal or a short-lived aberration."
Anderson adds that the Dodge data show that "this recession is following the historical trend. The construction industry is successful when there is a steady stream of new, multi-year projects coming on line to replace those projects that are reaching completion. While the industry has been buoyed by the willingness of owners and tenants to renovate their existing spaces, we will need a string of months similar to May before the industry can expect a fuller, more robust recovery."
The NYBC's analysis suggests that the industry may have a long road back. In the residential sector, construction began on an average of 2,700 new units per month throughout the city in '08. For the first four months of this year, the figure fell to 460 units per month before rising to 671 units in May. One- and two-family houses are not included in the data.
Nonresidential building construction starts, including offices, hotels, schools and hospitals, averaged $286 million for the first four months of '09, compared to a monthly average of $1.6 billion at the beginning of '08. In May, the value of nonresidential starts topped $1.1 billion.
Public-sector infrastructure starts averaged $73 million for the first three months of '09, compared to a monthly average of $504 million during Q1 '08. Then in April, the value of these non-building construction starts rose to $302.7 million and more than doubled to $710 million in May, according to the NYBC.
As might be expected given the challenges of obtaining financing for new construction, alterations and renovations have held sway since the credit crunch set in. In the last half of '08, alterations/renovations accounted for about 40% of building starts. That jumped to 57% of all starts during the first four months of this year, peaking at 92% in April before dropping to 33% in May.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
