NEW YORK CITY-Citing a new Construction Outlook report for 2009-2011, New York Building Congress president Richard Anderson said Wednesday that overall construction spending in New York City was expected to drop by 20% in 2009. However, he did say the situation appears to be stabilizing, and the city could get through the current downturn without further deterioration in annual spending. Also taking the podium later that morning was the current president of the New York City Economic Development Corp., Seth Pinsky, who was upbeat despite the slump.
“This is still a strong construction market, this is not a market that’s collapsing,” Anderson told the audience. Still, he said, “the coming year is going to be challenging.” With the help of widescreen projected charts, graphs and bullet points, Anderson offered up details of the forecast Wednesday at the Building Congress’ breakfast event at the Hilton New York.
The report shows that spending on city construction will probably reach around $25.8 billion in ’09, a 20% decline from the all-time high of $32.4 billion the year prior. It says over the next few years, spending will probably remain steady, reaching $25 billion in 2010 and $25.6 billion in 2011, adding up to a three-year total of $76.4 billion.
Before Pinsky arrived at the breakfast from his early morning meeting with the mayor at Gracie Mansion, Anderson praised Bloomberg as a “construction mayor,” noting that one of the most dramatic increases in capital spending under his administration had been an ongoing overhaul of public schools.
Overall the report shows the importance of government spending in the industry, much of it on public projects like schools, roads, subways a total the NYBC says will reach $15.5 billion in 2009, up from $15 billion in 2008. Slightly sobering, the report predicts a slight drop to $14.7 billion 2010 and $14.3 billion in 2011.
Anderson told the builder-filled room that “the best jobs program in the city is an investment in the capital program.” He also said that despite the downturn, the city’s capital program was holding up.
Despite the initial 20% spending dip, employment in the sector will probably only decline around 8.3% to around 119,000 this year. Anderson attributed that to cost-saving measures on work sites across the city. The same report predicted around 116,000 jobs in 2010 and 120,000 jobs in 2011.<P.When Pinsky got on stage, he reminded the room of the dark days last November, what he called a "perfect storm squared," and then, despite those subsequently threatening clouds, he said the city had managed to pull off a "stunning success."
Pointing out that around 46% of the building industry’s spending came from government in ‘08, he said the figure would be closer to 60% this year. Hoping to foster the city’s economic diversity cred, Pinsky said the department’s goal included cultivation of the industrial sector, as well as bio-tech and an emerging green sector.
Looking forward, Pinsky urged the group to look back to the Great Depression of the 1930s. “Forward-thinking projects like Rockefeller Center, and the Empire State Building, were all constructed during the Great Depression,” he said.
He said a large portion of today’s office space was out of date. And when the times do improve, modern companies will be seeking modern, in most cases, green office space.
More fundamentally, he spoke to the city’s backbone, its infrastructure. While speaking to reporters, Pinsky said, “the bottom line is we’re competing with cities around the world, many of which have brand new infrastructure that’s been built in the last few years. Not only do we have to build new infrastructure, we also have to make sure the infrastructure we already have is kept up.”
Of another delayed, transformative, but controversy-laden project, the World Trade Center, Pinsky told reporters, “we are concerned that if Silverstein Properties and the Port Authority don’t reach an agreement in the near term, there’s the possibility that development at the site could grind to a halt.” With that sobering warning, he added, “this is an incredibly important project for Lower Manhattan and New York City, not just for development, but, for obvious reasons related to 9/11.”
Then, onto Brooklyn and another case of stalling at the lawsuit-laden Atlantic Yards standoff. In response to a question from GlobeSt.com, Pinsky said, “another lawsuit is easy to file, but less easy to win.” He says his agency is working very hard with the developers and the state to get the project’s details in order.
“We remain hopeful they’ll be able to make it to the financing market before the end of the year, but, this is a tricky project,” he told GlobeSt.com Wednesday. “And, until everything is in place, you don’t know that it will be in place, but we remain optimistic and we hope the project will in fact move forward.”
When pressed with what happens if the lawsuits do work, and there is a successful delay of the project’s successful trip to the financing markets, Pinsky stood pat, saying “we think this project is going to move forward, and that’s what we’re planning for.”