New york city construction starts down sharply in second quarter of 2010; prospects for a quick recovery recede
A New York Building Congress analysis of McGraw-Hill Dodge construction starts found that $2.5 billion worth of construction projects started in the second quarter of 2010, a 64 percent decline from the first quarter of this year, when construction starts reached $6.9 billion.
The value of construction starts for the second quarter is down 43 percent from the second quarter of last year ($4.4 billion in starts) and down 55 percent from the same period in 2008 ($5.5 billion). What’s more, at $2.5 billion, the value of new construction starts between April and June of this year even dropped below the first quarter of 2009, in the aftermath of the financial sector collapse, when the value of all starts reached $2.6 billion.
The data encompass all project starts in New York City, including new construction as well as alterations and renovations to existing structures, and reflect the estimated value of each initiated project through the entire period of construction. Also included in the data are construction starts in the “non-building” category, which includes bridges, highways, mass transit and water supply systems.
The second quarter saw declines in all sectors from the previous three months. The non-building sector experienced a modest decline in construction starts – from $774 million in quarter one, to $702 million in quarter two. That decline is more pronounced, however, when compared to the final quarter in 2009, when non-building construction starts topped $2.8 billion.
The residential sector, however, dropped from $673 million in the first three months of the year to $266 million in April, May and June. Still worse, the non-residential sector, which includes offices, schools, cultural institutions, hotels and government buildings, plunged from $5.4 billion in new starts in the first quarter to $1.5 billion in quarter two.
Sports facilities accounted for two of the top four construction starts, by value, in 2010, including Barclays Arena at Atlantic Yards and the Madison Square Garden renovation, both of which got underway this quarter. The largest construction start to date, according to McGraw-Hill Dodge, is the World Trade Center Transit Hub, valued at $3 billion. Other large 2010 starts include the Weill Cornell Biomedical Research Building ($650 million) and a $200 million United Nations conference building renovation, which is the only major office construction project initiated in the first half of 2010.
“The second quarter numbers are clearly disappointing – especially coming on the heels of two relatively impressive quarters,” said Building Congress President Richard T. Anderson. “While this poor showing could simply be a pause on the road to recovery, it demonstrates that demand is not yet sufficient to kick-start residential and office development.”
Mr. Anderson added, “Even more troubling is the lack of construction starts by the government sector, which has recently been responsible for about 60 percent of all construction activity in New York City. If the City and State governments are unable to maintain their capital budgets in the face of declining revenues, and if the federal government loses its appetite for stimulus spending, it looks like rough sledding for the construction industry.”
Charts and Diagrams
Source: McGraw-Hill Construction Dodge*
Source: McGraw-Hill Construction Dodge*
* Dodge data used for this analysis can be purchased at dodge.construction.com.
