Construction Declines in 2011
August 29, 2011
By Neal Tepel
The first half of 2011 saw significant declines in all sectors from the previous year. Construction starts in the non-building sector fell from $1.7 billion in the first six months of 2010 to $1.0 billion during the same period this year – a decline of 38 percent. By further comparison, a total of $3.5 billion in infrastructure projects started in New York City during the first half of 2008, which was shortly after the start of the recession that began in late 2007.
The residential sector continued its losing streak. Construction starts in the residential sector dropped to $840 million in the first half of 2011, compared to $1.3 billion in the first half of 2010; $1.4 billion in the first six months of 2009; and $3.6 billion during the same period in 2008.
First-half construction starts in the non-residential sector, which had been buoyed in 2010 by the start of the WTC Transit Hub, Barclays Arena and the renovation of Madison Square Garden, fell 40 percent – from $7.6 billion to $4.6 billion in 2011. The first half 2011 numbers, however, compare favorably to 2009 ($3.8 billion) and 2008 ($3.7 billion).
The $1.2 billion expansion of Terminal 4 at JFK Airport was the largest single construction start (by value) during the first half of 2011. The project alone accounted for more than one-quarter of all non-residential building starts in New York City.
The second most valuable construction start was the MTA’s $200 million Mother Clara Hale Bus Depot in Central Harlem, followed by a $195 million Manhattan garage and distribution center for use by the New York City Department of Sanitation and UPS. The MTA’s 63rd Street subway station along the Second Avenue Subway, valued at $176 million, is next, followed by the first private sector project on the list – the $175 million Jerome L. Greene Research Center at Columbia University.
“Construction activity in the first half of 2011 is extremely disappointing, especially when you consider the nearly $11 billion in construction starts for the same time last year," said New York Building Congress President Richard T. Anderson. "The more than $20 billion in construction starts recorded for the year in 2010, amid signs of a slowly strengthening economy, offered hope that the building industry was turning the corner. said New York Building Congress President Richard T. Anderson. The initial data for 2011, however, tells a story of relative weakness in each sector.”
There are signs of improvement, beginning in the second half of 2011. Building permits are up 12 percent this year, which offers hope for a modest rebound in residential construction. The Whitney Museum and Fordham University are moving ahead with major building projects, and Boston Properties has announced it will restart its $1 billion 55th Street tower project in the coming months. Both the Metropolitan Transportation Authority and Port Authority of New York & New Jersey have unveiled proposals that would fully fund their multi-billion dollar capital plans.
Anderson added, “Considerable work is being generated by the major projects already under construction, including at the World Trade Center. And there is hope for the near future as a large number of projects are ready to go. The question, of course, is will the economy cooperate?”