Total construction spending in New York City will top $20 billion for the first time in 2006, and exceed $21 billion in 2007 and 2008, according to New York City Construction Outlook, an annual forecast and analysis prepared by the New York Building Congress.The report was released in October during a Construction Industry Forum featuring Deputy Mayor Daniel L.Doctoroff.

According to the Building Congress report, which is based on an analysis of capital budgets, private sector development plans and other indicators, total construction spending in New York City will reach $20.8 billion in 2006, an 11 percent increase from 2005, when spending reached a record, non-inflation adjusted total of $18.8 billion.

“This marks the sixth installment in the Building Congress Construction Outlook series and never has the view been so positive. Each sector of the industry is demonstrating considerable strength, and each borough is experiencing considerable construction activity,” said Building Congress President Richard T. Anderson. “Given that World Trade Center construction activity won’t begin to peak until 2009 and that major development projects such as Atlantic and Hudson Yards are slated to commence in that time frame as well, it is quite possible that the building boom could continue unabated well into the next decade.”

Construction spending reached a record $18.8 billion in 2005 and is expected to reach $20.8 billion by the end of 2006 and exceed $21 billion in 2007 and 2008. Much depends on the ability of major public agencies to fully fund their capital programs.

The housing sector continues to perform at historic levels. Construction Outlook forecasts an average of $5 billion in spending and 30,000 new units annually between 2006 and 2008, which mirrors housing output for 2005. Just one decade ago, in 1996, the housing construction sector in New York City produced less than 8,700 new units on annual spending of less than $1 billion.

With more than half of the City’s construction spending devoted to the maintenance and development of public infrastructure, such as mass transit, public schools, bridges, roads and tunnels, the government sector remains the largest overall contributor to construction spending. Spending by New York City and State, the federal government and regional entities, such as the Port Authority of New York & New Jersey, will reach $11.6 billion in 2006, a 16 percent increase from the $9.7 billionspent in 2005.

The report forecasts public construction spending to reach $12.1billion in 2007 and $13.2 billion in 2008. Non-residential construction – which primarily encompasses private commercial development and also includes spending by private institutions – remains steady with approximately $4.3 billion forecast for 2006 (up from $4.1 billion in 2005). The Building Congress forecasts spending in this sector will reach $4.2 billion in 2007 before dropping to $3.47 billion in 2008 – although these numbers could rise given the anticipated construction of eight million square feet of new office space at the World Trade Center,
the bulk of which will be underway by 2008.

Deputy Mayor Doctoroff agreed with the Building Congress assessment, noting,“If we invest wisely, if we can think ahead and plan creatively, we can, in effect, have it all.” Deputy Mayor Doctoroff also echoed the Building Congress report in warning about looming challenges that threaten the future, including rising construction costs and the need to continue investing in infrastructure that is necessary to support projected growth.

The New York Building Congress prepared Construction Outlook with the assistance of Urbanomics, an economic consulting firm. It incorporates reviews of private construction data as well as public capital budgets and plans at the City, State and Federal levels. The full report can be viewed at buildingcongress.com/code/outlook/2006-2008-outlook.htm.