New York City Construction Levels to Drop from Recent Peak, According to New York Building Congress Report

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NEW YORK, May 6, 2004 – Total construction spending in New York City is expected to reach $15 billion in 2004, according to Construction Outlook 2003-2006, a report issued by the New York Building Congress at a forum today.

While the forecast represents a ten percent drop in spending from 2003 when construction spending reached a citywide record of $16.7 billion, this level of construction still far exceeds construction activity during the late-1990s when annual spending was calculated in the $10 billion range.

The Building Congress report, based on an analysis of capital budgets, private sector development plans and other indicators, forecasts construction spending of $14.8 billion in 2005 and $15.8 billion in 2006. The report attributes the short-term decrease in activity to a slowdown in commercial construction, brought on by the recent economic slowdown.

While construction spending is expected to decline, the Building Congress projects an increase in construction employment from 117,200 jobs in 2003 to 119,800 in 2004. Total construction jobs will reach 118,600 in 2005 before rising to 126,500 in 2006, which would surpass the previous construction employment record set in 2001.

“Despite a sluggish economy, high unemployment and budget deficits in City Hall and Albany, construction spending and employment remained robust in 2003 and served as a stabilizing force for the City’s economy,” said Building Congress Chairman Frank J. Sciame Jr.

Added Building Congress President Richard T. Anderson, “In the coming years, we expect a drop from recent peaks, but overall construction activity will remain strong with the prospect for robust growth starting again in 2006. Rather than forecasting a prolonged slump, our analysis indicates a short-term easing off of what was a breathless pace of the past three years.”

In preparing Construction Outlook, the Building Congress divided activity into three components: residential, non-residential and public infrastructure construction.

Residential construction spending reached $2.6 billion in 2003. That level of spending produced 20,800 units of housing. It is the first time that the number of new dwelling units surpassed 20,000 since 1985. Residential construction is expected to remain in the 20,000-unit range through 2006.

Non-residential construction – primarily private commercial development – will experience the steepest drop in activity in the coming years. After producing 16.9 million square feet of non-residential space in 2003, the Building Congress projects a drop to 11.3 million square feet in 2004 and 6.5 million square feet in 2005. Thanks to projected work at the World Trade Center site, non-residential construction should rebound to 9.7 million square feet in 2006.

Public infrastructure spending, at $8.5 billion, accounted for half of 2003’s construction spending. While spending in this area will not rise as fast as in recent years, infrastructure spending is expected to reach $8.6 billion in 2004, $9.9 billion in 2005 and $9.8 billion in 2006. While the New York City Capital Budget is expected to decline over this period, proposed spending increases for the Metropolitan Transportation Authority and the Port Authority of New York & New Jersey could pick up that slack.

The Building Congress report suggests that, despite great uncertainty, there are many positive signs for potential construction through 2010. These signs include ongoing planning at the World Trade Center; the City’s bid for the 2012 Olympic Games; recently unveiled plans for a stadium on Manhattan’s far West Side and a basketball arena in Downtown Brooklyn; and various rezoning initiatives in all five boroughs.

The New York Building Congress prepared Construction Outlook with the assistance of Urbanomics, an economic consulting firm. It incorporates reviews of private construction data as well as public capital budgets and plans at the City, State and Federal levels.

The full report can be viewed at http://www.buildingcongress.com/code/outlook/2006-outlook.htm.

 

The New York Building Congress is a membership coalition of business, labor, association and government organizations promoting the design, construction and real estate industry in New York City.