Construction spending by public and private nyc institutions holds steady despite economic downturn

Paced By Educational Institutions and Big-Ticket Projects,

Construction Starts Top $8 Billion Over Two-Year Period

Even in the face of an overall economic downturn, New York City’s private and public institutions initiated $8.1 billion in construction projects over a two year period ending in April 2010, according to a New York Building Congress analysis of recent data. The public sector was responsible for $4.87 billion, or 60 percent, of the value of these projects, while private sector owners accounted for $3.28 billion in project starts.

The data encompass all project starts, 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. The sectors examined include elementary and secondary schools, hospitals and health care, higher education, courts, libraries, cultural facilities and religious institutions.

A Positive Start to 2010
The value of institutional construction starts reached $1.1 billion in the first four months of 2010, which well exceeds the $325 million in new starts during the first four months of 2009. The hospitals and healthcare sector was responsible for the bulk of these 2010 starts, with nearly three dozen projects of varying sizes, including Weill Cornell Medical College’s $650 million medical research building.

In addition, total employment by colleges, universities, elementary and secondary schools, healthcare institutions and cultural facilities topped 700,000 for the first time in 2010. Employment in this sector, which has risen each year since at least 1990, currently stands at 713,000, up from 696,000 in 2009, 608,000 in 2000 and 504,000 in 1990.

Educational Institutions Lead the Way

The education sector, which encompasses higher education as well as elementary and secondary schools, accounted for 56 percent of the value of all construction starts between May 2008 and April of this year. This number is due mainly to the ongoing work of the New York City School Construction Authority, which initiated $3.1 billion in public school projects over this period (compared to $174 million in starts by private elementary and secondary schools). Private colleges and universities were responsible for $744 million in starts, while publicly-owned institutions of higher education, such as CUNY, accounted for $540 million in starts.

Another $1.96 billion in construction starts was attributable to hospitals and other health care facilities. Private health care institutions accounted for $1.4 billion of that amount. Cultural institutions started another $764 million in construction projects followed by court facilities with $600 million.

Big Ticket Projects Moving Forward

More than 1,500 construction projects have been initiated over the two year period, including 900 in the public school system alone. While many projects represent relatively minor upgrades to existing facilities, it is worth noting that 11 of the projects started are valued at more than $100 million apiece. Combined, those 11 projects are worth $2.9 billion.

Alterations and renovations of existing facilities accounted for $3.3 billion in construction value during this period. Notable projects in this category include the $458 million renovation and expansion of the Javits Convention Center and $173 million in upgrades to the Thurgood Marshall U.S. Courthouse.

Construction of new facilities totaled $4.8 billion in value. This stands in direct contrast with the office sector, which has seen very little ground-up construction outside the World Trade Center in recent years. Recent new construction starts include: the previously-mentioned Weill Cornell building; the $381 million City University of New York’s (CUNY) Advanced Research Center and $210 million Fiterman Hall; a Mount Sinai School of Medicine research building, valued at $225 million; and a $117 million Staten Island courthouse complex.

Positive Outlook
“New York City is extremely fortunate to serve as the home for many of the world’s leading educational, cultural, research and healthcare institutions,” said New York Building Congress President Richard T. Anderson. “These institutions recognize that they must continue to grow and adapt to a changing world in order to maintain their lofty status. And while they are not immune to the same funding challenges that face other sectors, the demand for their services is much less dependent on the overall state of the economy than the office and residential sectors.”

Mr. Anderson continued, “The signs of continued investment abound. Columbia, NYU and Fordham have unveiled detailed campus expansion plans that will stretch for years. CUNY has more than $1 billion in projects in varying stages of development. The Whitney Museum is moving forward with construction of a new museum building near the High Line. In addition, the New York City Department of Education has commitments for $9 billion over the next four years to modernize its teaching facilities while adding 30,000 new seats in 56 buildings across all five boroughs. These projects, and many more like them, clearly demonstrate New York’s continued vitality.”

Charts and Diagrams

Source: McGraw-Hill Construction/Dodge
Market Forecast and Analysis Services *

Source: New York State Department of Labor

Source: McGraw-Hill Construction/Dodge
Market Forecast and Analysis Services *

* Dodge data used for this analysis can be
purchased at dodge.construction.com.