Health and Safety

Healthcare Construction Remains Strong Despite Weak Economy

December 19, 2011
By Neal Tepel

New York’s healthcare sector continues to invest heavily to improve and expand its facilities, even in the aftermath of the 2008 recession, according to a New York Building Congress analysis of data from the New York State Department of Health (DOH) and McGraw-Hill Construction Dodge.

Between 2005 and November of this year, DOH has approved $17.3 billion in construction spending on healthcare facilities throughout the State. Work has already begun, and in some cases is complete, on $10.4 billion of these projects.

In New York City alone, projects worth $8.3 billion have been approved by DOH from 2005 through November of this year, of which $4.8 billion is completed or underway.

The Building Congress analysis found that planned investment in the three years following the 2008 downturn was actually greater than in the three years preceding the downturn. Between 2009-2011, the healthcare industry has received approval for $7.3 billion of new projects, compared to the $6 billion approved from 2005 to 2007.

Major Projects Break Ground
Several significant projects broke ground in recent years, indicating ongoing confidence in the market. In fact, seven major projects in New York State, worth a combined $657 million, were approved in 2010 and are now under construction.

These include such major New York City projects as Weill Cornell Medical College’s Biomedical Translations Research Building ($637 million), North Shore-LIJ’s Pavilion at Cohen Children’s Medical Center ($121 million), and its Zucker Hillside Inpatient Psychiatric Facility ($125 million).

Construction Starts Down Slightly in 2011
Despite the current overall strength in healthcare construction spending and approvals, recent McGraw-Hill Construction Dodge data shows the value of construction starts through October of this year totaled $490 million; down from $989 million at the same time in 2010; and $562 million in August 2009.

The outlook could improve instantly, however, if work commences on any of the four large projects approved this year. These projects have a combined value of $528 million. Another thirteen New York City projects, worth a combined $1.6 billion, were approved between 2008 and 2010, but have not yet begun. According to McGraw-Hill Construction Dodge data, only one project worth more than $50 million has commenced this year.

Richard T. Anderson, President of the New York Building Congress, observed, “The provision of modern, high-quality healthcare facilities is a bedrock of the New York City building industry and one of the largest sources of construction spending in New York State. Ongoing investments by healthcare organizations have helped sustain the construction industry in the past few years. Despite a slight dip in new starts in 2011, we expect activity to remain brisk as projects already approved by the Department of Health move forward in the coming months and years.”

December 19, 2011

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