A construction site

In 2011, $13.8 billion worth of construction projects began, a decline of 31 percent from 2010, when $20 billion in projects began, according to numbers released from the New York Building Congress today.

The reason for the decline was a 39 percent drop, to $8.4 billion, in work on non-residential buildings such as offices, hotels, schools, hospitals, transit stations, power plants and other institutional buildings, the report says. This was a marked departure from the numbers in 2010, when construction on such buildings grew by 41 percent, to $13.7 billion. [more]

The number of stalled construction sites in New York City dropped by 8 percent between October 2010 and October 2011, according to the New York Building Congress, but remained 40 percent above the number recorded two years ago. An average of 638 construction sites were identified as stalled in October of this year, compared to 693 in October 2010 and 454 in October 2009.

The average number of stalled sites in the five boroughs has either fallen or remained constant in each of the past 11 months, the Building Congress said. Overall, Brooklyn remains the leader in stalled sites, with a total of 299, or 47 percent of the city’s total; Queens is second with 131; Manhattan has just 126 frozen sites. -- Katherine Clarke [more]

As in the New York City market, rental vacancies nationally are way down and prices are up, according to a report by analytic firm Reis cited by the Wall Street Journal and Bloomberg News.

The national vacancy rate fell to 5.6 percent in the third quarter, the lowest figure since 2007, and 1.5 percentage points below where it stood during the same period a year ago. Meanwhile, the average rent rose to $1,004, from $997 in the second quarter and $981 in the third quarter of 2010. [more]

Already the third most expensive city to build in, New York City construction costs rose for a second consecutive year, according to two separate industry analysts’ reports cited by Crain’s. Rider Levett Bucknall measured a 2.13 percent increase in year-over-year costs, while the figure was 3.55 percent by Engineering News-Record’s count.
Those gains, while greater than the 1.94 percent recorded in 2010, actually match the national average, suggesting it’s the cost of material, and not labor, that’s powering the rising expense. Construction labor negotiations staged this summer helped control some costs, although the Real Estate Board of New York was unsatisfied with the outcome, as costs, the board says, are still too high. [more]

Though still below 2008 levels, new construction permits in New York City are on the rise, an indication that developments may be back on track, the Wall Street Journal reported.
Permits for new buildings, alterations and demolition rose by approximately 12 percent during the first half of 2011 compared with the same period last year, according to new data from the Department of Buildings. Demolitions — normally a firm indicator of brand new projects — jumped by 14 percent.
“More construction permits mean more people are going to work,” Buildings Commissioner Robert LiMandri said.

Private developers are still experiencing difficulty when it comes to financing big projects, said Richard Anderson, president of the New York Building Congress, as lenders tighten their restrictions. [more]

While for the first time since 2000 Manhattan will see an entire year go by without the opening of a significant new office tower, the borough is gearing up for a surge in new office construction mid-decade, according to recent analysis by the New York Building Congress, released yesterday.

Manhattan added about 20 million square feet of new office space between 2001 and 2010, a modest offering by historical standards. Nearly 4 million square feet of new office space was created annually in the 1970s and 1980s.

“It is remarkable how little office space was actually added in Manhattan during the recent building boom,” said Richard Anderson, president of the Building Congress. — Katherine Clarke [more]

Despite hints of recovery scattered across segments the city’s real estate industry, the construction sector continues to reach new employment lows, while wages increase. Construction employment fell to 101,200 jobs in the first quarter of 2011, a 7 percent decline from the same period a year ago and the lowest total since the second quarter of 1998, according to New York Building Congress’ analysis of New York State Department of Labor statistics released today. The data examines the number of employees on payroll and not days worked, so the snowy 2011 winter does not impact the numbers. Of all sectors of construction, only heavy construction and civil engineering gained jobs thanks to the city’s public infrastructure projects, according to the report. TRD [more]

Residential construction declines powered a solemn 2010 for New York City construction, that included a 12 percent decline in construction spending and 9,000 fewer industry jobs, according to report released by the New York Building Congress today. Construction spending in the city fell in to $23.7 billion in 2010 from $27.1 billion in 2009 and roughly $31 billion in 2008, and employment hit 111,800, the lowest level since 2004. Most of the job losses have come from building construction jobs and specialty trades, as the heavy construction and engineering sectors gained numbers last year. But the most drastic declines over the last two years have come from residential construction: just 5,400 new units were built last year at a cost of $2.2 billion, down from 34,000 and $6.73 billion, respectively, in 2008. TRD Comments

New York City infrastructure construction spending is set to remain “above historic standards” during fiscal year 2012 but taper off considerably over the next decade, according to a New York Building Congress report released today. The city has proposed spending roughly $8.8 billion on infrastructure construction projects, such as roads, bridges and schools, during fiscal year 2012 and around $8.1 billion the following year. But while the city has planned an aggressive infrastructure spending strategy for the near-term, it’s proposed spending just $47 billion total between 2012 and 2021, a near-halving of current capital investment in public works. TRD [more]

As the demand for new hotels and condominium projects has weakened, New York City’s construction industry — which saw a modest increase in costs this year — is turning to the educational market for new opportunities. “Since the private market has declined so much for the past two years, it means the educational sector has grown as an overall percentage of the total market,” Richard Anderson, president of the New York Building Congress, told the Wall Street Journal. In 2008, the peak year, about $31 billion was spent on all construction activity in the city, $4 billion of which was dedicated to public schools and private institutions, Anderson said. In 2009, education construction accounted for $4.4 billion of the $27 billion in construction activity. So far in 2010, the overall market has decreased to about $25 billion, with about $5 billion being spent on school construction, Anderson estimated. But the future is uncertain for the education market, as government revenues are dwindling and private endowments are shrinking. “Our fear is that educational construction may not continue at the current level,” Anderson said. [WSJ]

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