Forecast: NYC Building Boom Will Peak in 2008

By Karen Mathews | October 15, 2008

New York City’s building boom will peak this year, with construction jobs plunging from a record 130,100 in 2008 to 100,250 in 2010, according to a report released yesterday.

The report by the New York Building Congress says construction employment could drop further after 2010 “if recent events lead to a significant economic downturn.”

Building Congress President Richard Anderson noted that more than half of the city’s construction jobs are publicly funded, and the Metropolitan Transportation Authority is the single biggest source of construction jobs.

The report recommends that the city and state work to find funding for MTA projects to keep the industry healthy. “Money for all infrastructure is at risk right now,” Anderson said.

MTA spokesman Jeremy Soffin said it is too soon to know how the financial crisis will affect capital projects like the Second Avenue subway line.

“We’re highly dependent upon access to credit markets,” he said. “It’s too soon to know where the market will stabilize.”

The building forecast, “New York City Construction Outlook,” is based on an analysis of capital budgets, development plans and other indicators.

It says construction spending will reach a record $33.8 billion in 2008, a 16 percent increase from 2007, when $29.1 billion was spent.

Total construction spending will dip to $33.4 billion in 2009 and drop sharply to $26.2 billion in 2010, according to the forecast.

The report forecast a record 35,700 new residential units with a total value of $6.8 billion in 2008. Those numbers are up from 31,902 units worth $5.3 billion in 2007.

The Building Congress, a coalition of developers and unions in the construction industry, said the housing spike during a nationwide housing slowdown is partly explained by a push for residential developers to get new projects started prior to a July 2008 change in a tax-incentive program.

Steven Spinola, president of the Real Estate Board of New York, said the market is still strong enough that developers will want to build here, but with credit tightening they may not get financing.

He said bankers may demand as much as 40 percent equity, up from 10 or 15 percent in the days of easy credit.

“There will be fewer projects financed,” Spinola said Monday. “The people who are going to have the ability to go ahead are the people who are known to have deep pockets.”

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Associated Press Writer Amy Westfeldt contributed to this story.

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