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Di Filippo adds that more companies are bidding for the jobs moving forward, but little to none of it is private work.
A Dearth of Private Development
McGraw-Hill Analytics anticipates declines in hotel and motel construction, at $520 million in 2010 down from $569 million in 2008, and far off the $2.9 billion reported in 2008. Office and bank construction will fall to $3.4 billion from $3.5 billion; manufacturing will decrease to $600 million from $965 million; and other commercial buildings will decline to $2.8 billion from $3.2 billion.
“No one is lending, and there is no private investment in commercial buildings,” says Steve Stallmer, vice president of Government & Public Affairs for Associated General Contractors of America New York State Chapter in Albany. “The industry is feeling the pinch. They are finishing projects and have nothing to look forward to.”
Stallmer calls it a worst-case scenario for the building industry, and he does not expect things to improve until the credit industry is fixed, people start lending and a general economic rebound occurs.
“Overall, it’s a bleak forecast,” Stallmer says. “We’re losing jobs every month.”
However, Stallmer adds, “there are some opportunities on the highway side to mitigate a decline in building projects.”
Richard Lambeck, PE, clinical associate professor of construction management at the New York University Schack Institute of Real Estate, agrees private sector work has slowed. He indicates more than 600 projects have stopped due to lack of continued financing. However, he offers some bright spots in building construction, such as the World Trade Center work, the United Nations and Jacob K. Javits Convention Center expansions, and school jobs. Decreasing costs have sparked the start of projects, he adds.
“The public sector is stepping up a little, but it’s not enough to make up for the loss on the private side,” adds Ron Berger, executive director of the Subcontractors Trade Association in New York.
Berger calls the current construction outlook “not good” and thinks it might get worse before it gets better.
“Look in the architects’ and engineers’ offices; they’re doing zero,” Berger says. “That will affect our people. If they don’t design, we don’t get to build. It’s a real tough situation.”
Lou Coletti, president & chief executive officer of the Building Trades Employer's Association in New York, also reports architects and engineers are not busy with projects in design.
“What that means is it will take longer for us to come out of it,” says Coletti, adding that he thinks “2010 is shaping up to be a horrendous year.”
In addition to the lack of financing, Coletti says there is little demand for commercial and residential projects. On the public side, he expresses concern that revenue woes could force state and municipal governments to trim capital improvement budgets.
Simonson also voices concern about declining tax revenues and anticipates that may delay some public starts, including school construction for two to three years. Local governments...