Contact: Cathy DelliCarpini-Kruse (212) 481-9230
Contact: Bud Perrone (212) 843-8068
Last January, the New York Building Congress released “New York City Construction Outlook.” The study, which is updated annually, reviews construction activity for the prior year and forecasts construction spending and employment levels for the coming years.
The Building Congress report forecast construction spending in 2003 to top $15.5 billion. A number of industry watchers, Building Congress leaders included, wondered whether those numbers would hold up, given the ongoing recession and major budget deficits at all levels of government. In the final analysis, those numbers not only held up; they actually exceeded the rosiest predictions.
In fact, the year 2003 saw gains across all sectors of the building industry. More housing units were constructed throughout the five boroughs. Led by the Time Warner building at Columbus Centre, approximately five million square feet of office space came on line – the third consecutive year of major office construction activity.
In addition, the public sector continued to fuel the economy by moving forward with a host of projects in all categories, including transportation upgrades, educational and medical facilities and environmental projects.
The construction industry, according to the Building Congress’ initial analyses, will continue to be a source of strength for New York City’s economy, but is unlikely to produce the same levels of output in 2004.
A pullback is expected in private office and other non-residential construction, which has slowed in response to what had until recently been a jobless recovery. While the prospects for future construction in these areas is buoyed by the recent job growth in the New York City market, construction spending generally lags considerably behind expanding employment and thus is unlikely to affect spending and employment levels in the coming year.
The news on the residential front is more optimistic short-term. Thanks to continuing strong demand, which has been spurred by population growth, new household formation and record-low interest rates, as well as recent New York City zoning changes, the Building Congress expects the quantity of new housing created to remain at the 20,000 unit levels reached in recent years. This is encouraging given that New York City must add 20,000 units to its housing stock each year in order to keep pace with the market demand.
Looking even further into the future, there is much to like. Work on the Freedom Tower, the first office building to go back up at the World Trade Center site, is slated to commence in late summer. It is likely that work will also begin for the Memorial and transit hub. And according to WTC leaseholder, who addressed a Building Congress forum in late December, construction on the Freedom Tower will be opened in 2009, followed by one building completion a year through 2013.
In addition, there are a host of major development projects on the drawing board, including a $5 billion transformation of the Hudson Rail Yards into a sparkling mixed-use community. Recent zoning changes is likely to spur new development along the East River in Brooklyn and Queens.
The public sector also figures to continue its brisk pace, assuming that the revenue is there to fund its ambitious initiatives. At the top of the list are the major system expansion plans of the Metropolitan Transportation Authority, and Mayor Bloomberg’s proposal to spend $13 billion on school construction over the next five years.
Of course, ambitious plans are always contingent upon the financing to back them up. It will be critical in 2004 and beyond for the design, construction and real estate industry to be sensible advocates of dedicated infrastructure financing and increased federal support for Lower Manhattan and the transit system. The building community must also continue to voice its support for development initiatives being pushed by leaders in the public and private sectors.
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.