NEW YORK CITY-Construction starts citywide took a steep dive in the second quarter, plunging 64% from Q1’s $6.9 billion to land at $2.5 billion, according to the New York Building Congress. The Q2 results also compare unfavorably on a year-over-year basis, and represent a 55% drop from Q2 2008.

“The second quarter numbers are clearly disappointing – especially coming on the heels of two relatively impressive quarters,” Building Congress president Richard T. Anderson says in a report released Tuesday.  “While this poor showing could simply be a pause on the road to recovery, it demonstrates that demand is not yet sufficient to kick-start residential and office development.”

Even more troubling, Anderson says, is “the lack of construction starts by the government sector, which has recently been responsible for about 60 percent of all construction activity in New York City. If the city and state governments are unable to maintain their capital budgets in the face of declining revenues, and if the federal government loses its appetite for stimulus spending, it looks like rough sledding for the construction industry.”  

The Building Congress analysis of McGraw-Hill Dodge construction data found that all sectors were down in Q2. The non-building sector, which includes bridges, highways and other infrastructure, saw a relatively modest decline in construction starts from $774 million in Q1 to $702 million in Q2. Residential saw a dramatic falloff from $673 million in the first three months of the year to $266 million in April, May and June. Worse still, the non-residential sector, which includes offices, schools, cultural institutions, hotels and government buildings, plunged from $5.4 billion in new starts in the first quarter to $1.5 billion in quarter two, the Building Congress says.

The largest construction start so far this year, according to McGraw-Hill Dodge, is the World Trade Center Transit Hub, valued at $3 billion.  Other large 2010 starts include the Weill Cornell Biomedical Research Building at $650 million and a $200-million United Nations conference building renovation. The latter was the only major office construction project initiated in the first half of this year.