Skip to main content

Government Construction Rose Significantly in Final Three Months of 2009

A New York Building Congress analysis of McGraw-Hill Construction Dodge construction starts found that $16.6 billion worth of construction projects were started in 2009; a 29 percent decline from 2008 when projects worth $23.3 billion began.

The data encompass all project starts, including new construction as well as alterations and renovations to existing structures, and reflects the estimated value of each initiated project through the entire period of construction.

The final quarter of the year, however, showed encouraging signs. Projects worth $5.6 billion started in the last three months of 2009, which is up 51 percent from the $3.7 billion started in the fourth quarter of 2008, and higher than both the second ($4.4 billion) and third quarters ($4.1 billion) of 2009.

Virtually the entire 29 percent year-to-year decline is explained by the discrepancy in first quarter results during the past two years. In the first quarter of 2008, when construction activity was still booming, construction starts reached $9.0 billion. The global economic meltdown, however, reached the New York City construction market by the start of 2009, as evidenced by construction starts of just $2.4 billion during the first three months of the year.

Of the three industry sectors, public sector work experienced far and away the biggest rebound in the final three months of 2009. Non-building construction starts, encompassing such public sector projects as roads, bridges, water systems and other infrastructure, reached $2.9 billion in the fourth quarter, up from $947 million in the third quarter, $1.3 billion in quarter two and $255 million in the first three months of the year.

The value of nonresidential construction starts, including hotels, schools, offices, hospitals and other institutional building, has remained steady for the past three quarters. Construction starts in this sector reached $2.4 billion in the fourth quarter of 2009, down slightly from $2.5 billion in the third quarter and $2.6 billion for the second quarter. This sector opened the year with just $1.3 billion worth of construction starts from January through March 2009.

Based on total value, residential construction starts, on the other hand, experienced its worst quarter of the year. Construction started on housing units declined to $410 million (1,910 units total) in the final three months of the year, down from $668 million (3,147 units) in the third quarter, $494 million (1,755 units) in the second quarter, and $935 million (3,391) in the first quarter.

“When looking at the numbers, there is clear evidence that the New York City construction market is heavily dependent on government work,” said New York Building Congress President Richard T. Anderson. “The market for new construction projects flat-lined after the economic collapse and remained there into the spring of 2009. Since then, however, activity is rebounding, with construction starts topping $4 billion in the second and third quarters before rising above $5 billion for the final quarter of the year; the first time that has happened since the summer of 2008.”

Mr. Anderson continued, “Public construction has been the largest factor in this nascent rebound. The question is whether government will sustain recent levels of funding, given the budgetary woes afflicting City Hall and Albany, as well as transportation agencies such as the Port Authority and the MTA. If government officials enact significant cuts to major capital programs, a second construction dip is possible, as it seems unlikely that the residential and office construction market will dramatically improve in the short-term.”

Charts and Diagrams

Source: McGraw-Hill Construction Dodge Construction Starts*

Source: McGraw-Hill Construction Dodge Construction Starts*

Source: McGraw-Hill Construction Dodge Construction Starts*

*Dodge data used for this analysis can be
purchased at


Feb 2010