City Construction Activity Holding Steady According to New York Building Congress Report

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NEW YORK, January 8, 2003 – Total construction spending in
New York City is estimated to have reached $15.3 billion in 2002,
down $600 million from a record-breaking total in 2001, according
to Construction Outlook 2002-2005,
a report issued by the New York Building Congress. This level of
construction far exceeds citywide construction levels during the
mid- to late-1990’s, 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 will remain essentially flat in 2003 ($15.5
billion) and 2004 ($15.3 billion), before rising to $17.8 billion
in 2005. The report cautions, however, that there is considerable
uncertainty given current market forces and State and City budget
gaps.

“Despite a weakening economy, growing deficits and uncertainty
stemming from the 2001 terrorist attack, construction spending and
employment have held up remarkably well,” said Building Congress
Chairman Marilyn Jordan Taylor. “Our analysis of future construction
plans indicates continued opportunity for the industry, and there
seems to be the political will to press ahead with vital projects.
The big question regarding public and private sector work, however,
is the availability of financing necessary to move projects from
planning to construction.”

Building Congress President Richard T. Anderson added, “The
current level of uncertainty is heightened by a slowing trend in
the design sector, the first stage in the construction process,
and less than full employment in the construction trades. While
the slowdown may simply represent an easing off of what was a breathless
pace over the past three to four years, a prolonged or deepened
slump in these areas could spell trouble for certain industry sectors
in the years ahead.”

According to the Building Congress, construction industry employment
is estimated at approximately 123,000 in 2002, which is down slightly
from 2001 when the City reached a record level of 124,800 workers.
Total construction-related employment was 90,200 in 1995 and has
risen steadily since, topping 100,000 for the first time in 1998.
Employment levels are expected to stay above 120,000 over the next
three years.

In preparing Construction Outlook,
the Building Congress divided activity into three components: residential,
non-residential and public construction. Residential
construction spending in New York City is expected to have
reached $1.7 billion (12,300 units) in 2002. While 25 percent less
than a year ago, this level of spending is still more than twice
that of 1995 (5,135 units). Looking ahead, residential construction
is expected to remain in the $1.7-1.8 billion range (approximately
12,000 units per year) through 2005.

Non-residential construction
— including private commercial and institutional development —
is estimated at $4.3 billion in 2002 (13.5 million sq. ft.), a slight
drop from 2001 ($4.6 billion/14.4 million sq. ft.) Again, activity
levels remain well ahead of the mid-1990s ($2.75 billion/5.4 million-sq.
ft. in 1995). Construction in this sector is expected to change
little in 2003 ($4.3 billion/13.5 million-sq. ft.) and dip in 2004
($3.4 billion/10.6 million sq. ft). A return to current levels is
forecasted for 2005 ($4.2 billion/13.3 million sq. ft.).

Public construction — new
construction as well as repair and maintenance of infrastructure,
educational facilities and transportation networks – is estimated
to have totaled $9.1 billion in 2002; up from $8.9 billion in 2001.
From 1995-1999, public construction spending ranged just $5.4-$6.5
billion. The Building Congress analysis indicates total infrastructure
spending will remain at $9.0 billion in 2003; rise to $9.7 billion
in 2004 and reach $11.0 billion in 2005.

Construction Outlook analyzes
the impact of future construction in Lower Manhattan; however, the
report’s figures do not include potential activity related
to rebuilding on the World Trade Center site. While replacing up
to 11 million square feet of commercial and retail space will greatly
increase overall building activity, the bulk of such work is not
likely to proceed earlier than 2005.

Construction Outlook was
prepared by the New York Building Congress with the assistance of
Urbanomics, an economic consulting firm, and includes 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 www.buildingcongress.com/code/outlook/2005-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.