Value of nyc office construction starts down 30 percent in 2011

More than 80 Percent of Starts Were Alterations & Renovations to Existing Space

A New York Building Congress analysis of McGraw-Hill Construction Dodge data found that $1.8 billion worth of office construction projects started in New York City in 2011, a decline of 30 percent from 2010, when projects worth $2.6 billion began.

The data used in this report encompass all project starts, including brand 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 2011 decline in office starts is directly attributable to a lack of ground-up construction. Eighty percent of last year’s office construction starts involved alternations and renovations (A&R) of existing space ($1.5 billion), while 20 percent was attributable to the construction of new office space ($335 million).

The value of A&R starts has remained steady in recent years. In 2009, $1.7 billion in A&R projects were initiated, followed by $1.2 billion in 2010. A total of $340 million in A&R projects began in the first four months of 2012, compared to $563 million during the same time period in 2011.

The value of new construction starts has been up and down over the past three years, due in part to the fluctuations in value inherent in large projects. New construction starts reached $335 million in 2011, down from $1.4 billion in 2010 and $874 million in 2009. The spike in 2010 was attributable to the start of construction at two World Trade Center towers.

“For architects, contractors and skilled trades working in the interiors sector, there is good news in these numbers,” said New York Building Congress President Richard T. Anderson. “In addition to investments being made by firms who are leasing space in existing buildings, many companies are spending considerable amounts to reconfigure and modernize their leased spaces to promote more efficient and productive work environments.”

Mr. Anderson continued, “The outlook is not as rosy, however, for those design and construction firms that specialize in ground-up development. As more efficient designs and technologies allow companies to compress more workers into tighter spaces, it reduces demand for new buildings. In addition, office employment and the overall economy are not expanding at the pace necessary to support a number of planned office developments. Our concern is that this could lead to a surge in unemployment among certain skilled trades, such as ironworkers and operating engineers, if there are no new projects to replace the towers that are nearing completion, including 1WTC, 4WTC and the International Gem Tower.”

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Source: McGraw-Hill Construction Dodge*

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