Construction employment in New York City is expected to drop by 8.3% this year, but, according to the most recent report from the New York Building Congress, that number represents a significant shift from last year’s doomsday prediction.
The Building Congress’ annual Construction Outlook predicts that despite a 20% drop in construction spending for 2009 – down to $25.8 billion from $32.4 billion in 2008 – the number of jobs lost this year will top out around 11,000. A year ago, the same report anticipated the industry would lose 30,000 in 2009.
“What we found in terms of employment was reassuring,” says Richard T. Anderson, president of the Building Congress. “This is still a strong construction market. It’s not collapsing by any means.”
Anderson points to the strength of the public sector as reason for cautious optimism heading into 2010 with about 60 percent of construction activity coming from government spending on mass transit, schools and other infrastructure projects.
“Government projects remain the largest source and primary driver of construction activity in the city,” he adds.
The outlook isn’t so rosy in other sectors, Anderson concedes.
The residential construction will have produced fewer than 6,300 units by the end of 2009 while the previous five years saw more than 30,000 new units.
“This is a market sector that will take some time to rebound,” he says.
Another market in the midst of a significant dive is the non-residential building. With the city’s two major sports and entertainment projects – Yankee Stadium and Citi Field – complete and a near-standstill in the new office sector, the report predicts a decline from $11.1 billion in 2008 to $6.9 billion in 2009, with projects to drop further in 2010 and 2011. But Anderson says he expects the decline of new office construction to usher in an increase in rehabilitation projects of existing buildings.
“Unlike the last couple of years when everything was white hot, we’re back to the historical nature of the different sectors,” he says. “Some will be stronger and some will be weaker.”
Many contractors and architects at a breakfast forum hosted by the Building Congress this week were skeptical of the group’s encouraging predictions.
“I don’t know how anyone can look out on what’s happening and say that stabilization is around the corner,” said one contractor who asked that his name not be used.
“I think it’s an overly optimistic point of view,” says Lou Colletti, president and CEO of the Building Trades Employers Association of New York. “Guys bidding work in the private sector say there’s nothing going on. Architects and engineers say they don’t have any decent level of work on the boards.”
Public jobs may help sustain the current level of employment in the short term, Colletti says, adding that there is no guarantee all of those will go forward as planned.
“Much of the public sector dollars budgeted will not get spent in 2010,” he says. “I think we’ll still see 30,000 unemployed by March.”
Anderson acknowledged that the somewhat optimistic employment numbers included in the report hinge on the public work actually coming to fruition.“If the public employment doesn’t hold up, we could see a much bigger unemployment number,” he says.