NYC Construction Starts Down, but Residential Projects Double in Value
September 19, 2012
Around Town by Neal Tepel
September 18, 2012 – A New York Building Congress analysis of McGraw-Hill Construction Dodge data finds that $6.6 billion worth of construction projects were started in New York City in the first half of 2012, a 16 percent decline from the first half of 2011, when construction starts reached $7.9 billion. Looking back further, construction starts reached $10.6 billion in the first half of 2010, $7.0 billion in the first half of 2009, and $10.7 billion from January through June of 2008. The data encompass all project starts in New York City, 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 housing sector shows signs of improving. The value of residential construction starts more than doubled – from $929 million the first half of 2011 to $1.9 billion in the first six months of 2012. The 2012 numbers also topped the first half of 2010 ($1.3 billion) and 2009 ($1.5 billion), but remain well below the $3.5 billion in residential construction starts achieved over the same period in 2008. Four of the top ten project starts by value occurred in the housing sector, including the Avalon West Chelsea, Baccarat Hotel Residences New York, 388 Bridge Street in Brooklyn and 150 Charles Street in the West Village.
“The numbers coming from the residential sector are very encouraging,” said New York Building Congress President Richard T. Anderson. “If you go back to July of 2011, this sector has generated nearly $4 billion in new projects. While that level of activity remains well below the peak, it nonetheless represents the sector’s best performance since 2008.”
“Non-building” construction starts, which encompass bridges, highways, mass transit, water supply systems and other infrastructure, also increased – from $906 million in the first six months of 2011 to $1.5 billion during the first half of this year. Non-building construction starts reached $1.7 billion in the first half of both 2009 and 2010, and totaled $3.6 billion at the start of 2008. The biggest construction starts (by value) in this sector to start 2012 were a $242 million project to connect the West 60th Street area to the Third Water Tunnel and a track and train signals project related to the ongoing construction of the Second Avenue Subway.
Non-Residential Starts Decline
The largest and weakest link in the chain for the first half of 2012 was the non-residential sector, which includes commercial office and retail buildings, public and private schools and universities, as well as cultural and entertainment venues. The value of construction starts in this sector fell to $3.2 billion in the first half of 2012 after reaching $6.1 billion during the same period in 2011. The two biggest construction starts in the first half of 2012 occurred in this sector – a $400 million renovation of Macy’s Herald Square and a $250 million renovation of the Winter Garden in the World Financial Center. The largest office construction start, however, was 19th on the overall list of projects – 51 Astor Place, a relatively modest 12-story building.
“The data from the non-residential sector, while disappointing, are understandable given the tepid pace of the City’s and the nation’s economic recovery,” noted Mr. Anderson. “While there’s no shortage of planned projects, especially in the office sector, we are lacking the type of job growth and confidence in the overall economy that is necessary to get these projects off the ground quickly.”