NYBC projects that construction spending will reach $28.8 billion by year-end but fall to $25.1 billion in 2013. The analysis is an update of NYBC’s annual New York City Construction Outlook report that was released last October.
The NYBC analysis shows that government construction spending including mass transit, public schools, roads, bridges and other infrastructure accounted for 53% of all construction spending in the five boroughs last year. That put this sector’s spending at $14.4 billion in 2011, down 10% from 2010. NYBC predicts government construction spending will decline further, to $12.7 billion in 2012 and $9.69 billion in 2013—a 40% decline from 2010.
"To its credit, the government sector, led by the Bloomberg administration and the Metropolitan Transportation Authority, has been an abundant and vital source of industry jobs and strategic investment since the Great Recession," says Richard T. Anderson, president, NYBC. “The strains are starting to show, however, and agencies are bracing for a severe downsizing of their budgets,” adds Anderson. “If this happens, it may take years to recover.”
The residential sector, however, is making a dramatic comeback, the study shows. After bottoming out at $2.3 billion in 2010, residential construction spending increased to $2.9 billion in 2011 and is expected to climb to $4.8 billion in 2012 and $6.8 billion in 2013. The forecast is based on a preliminary review of recent residential permitting data.
Non-residential construction spending is nearly flat, reaching $10.1 billion in 2011 from $10 billion in 2010. Major projects under way in this sector including the World Trade Center, Barclays Center and Madison Square Garden have helped to keep the sector steady, NYBC says.
NYBC forecasts that non-residential construction spending will reach $11.2 billion by year-end but fall to $8.6 billion in 2013.
“It is certainly gratifying that the residential sector continues to rebound, but the New York City construction market is heavily reliant on public sector work, which is expected to decline significantly over the next two years,” Anderson says. “The building industry needs to continue working with its partners in government to move the needle higher on public capital budgets and secure dedicated funding for vital infrastructure initiatives.”