Building Congress Sees 20% Drop in Construction; "Interior Renovations" to Fuel Coming Non-Boom
The New York Building Congress predicts that by year's end, 2009 construction spending will be shown to have declined 20 percent against 2008 -- $25.8 billion versus $32.4 billion. This mostly reflects private rather than government projects, which they believe will show a half-billion dollars more spending than last year and 60 percent of all city building -- "the area of greatest concern," says Chairman Stuart E. Graham, as he doubts our cash-strapped state and city government can sustain it.
Nonetheless the Congress expects government spending to drop only about a billion dollars over the next two years, thanks in part to federal stimulus money. And they expect overall spending to stay about where it is, "steady" and "still robust," in the near term.
This is hard to figure: whereas the Congress saw five years of 30,000-plus unit growth before the recent bust, they predict just 6,300 units to be produced this year, with 7,900 and 9,900 created in the following two years...
Maybe they'll just cost more to build: "Even with the decline," says Congress President Richard T. Anderson, "2009 construction spending remains 45 percent greater than was achieved five years ago, in 2004." They also say construction jobs will have dropped in 2009 by only 8.3 percent, well behind the decline in building. It seems inflation is shoring up the number of dollars spent, if not the number of buildings built.
And if that's to hold up, it'll be in drywall and counter-tops rather than bricks and mortar, Anderson suggests to the Times: "I don't think you'll see another new commercial building for some time... Interior renovations to existing buildings will come back first."
And that's looking on the bright side. The President of the Building Trades Employers' Association tells Crains that the Congress' employment numbers are "really high" and "there is virtually no action in the private sector" -- despite the fact that unions contracted with his Association to limit overtime and prohibit strikes in an attempt to encourage building.
"They're way too exuberant," developer Douglas Durst tells the Times.
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