Annual Report 2008

Message from the Chairman and President

The headlines concerning big ticket construction projects have not been pretty of late. Financing, cost overruns and budget constraints have become serious issues for projects Citywide. But these disappointing signals do not spell the end for the City's unprecedented building boom.

New York City set a record for construction spending in 2007- an eye-popping $24.6 billion - and, according to New York Building Congress forecasts, spending will top $25 billion this year and next year as well, despite announced cutbacks.

While the mega-projects generally serve as the face of the building boom, its strength rests in the breadth of construction activity, which continues to stretch across all five boroughs and every category of building. This white-hot pace includes robust activity in residential, commercial, hospitality, infrastructure, cultural, education and healthcare sectors.

And many of the factors that led to this record construction activity are still in place.

• New York needs to produce 20,000 new housing units per year to keep up with population growth and replace aging units. Despite the housing boom of recent years, we are still playing catch-up from the 1990s, a decade in which new housing production routinely fell below 10,000 units a year.
• The office sector, while most affected by economic trends, has some of the lowest vacancy rates and highest prices ever recorded. There will be some drop off in office building activity, but with the World Trade Center, Goldman Sachs and Bank of America under construction, the pace will remain strong at least through 2009.
• The Bloomberg administration has overseen more than 80 rezonings, which has unlocked tremendous development potential in neighborhoods throughout the five boroughs and will facilitate construction of more than 45,000 housing units and 40 million square feet of commercial space.
• The institutional sector, which includes entertainment, culture, education and healthcare, will demonstrate continued strength due to the ongoing construction of new sports venues, the sustained influx of record numbers of tourists, and expansion programs such as Columbia University's.

Continuing to build for the City's future requires steady, multi-year investment in transportation, schools and other infrastructure. It is crucial that State and local governments maintain funding for these projects. Mechanisms such as the failed congestion pricing proposal are so important because they provide steady and dedicated sources of revenue for public projects. It is incumbent upon the Building Congress and our industry to continue to support such proposals.

It is possible, and highly probable, that megadevelopment projects and some infrastructure work will take longer to build out, and that some future plans might not be realized. But given all the positive indicators, it is hard, even in the current economic climate, to envision a significant deterioration in building activity for the foreseeable future. The City will keep moving forward, if at a somewhat less than breathless pace.

Dominick M. Servedio, Chairman
Richard T. Anderson, President