Annual Report 2010

Building the Future Now

Building for a better future takes patience and fortitude at all times, but especially during periods of uncertainty. Too often in New York City's history, public and private sector leaders have lacked the will during economic downturns to forge ahead on projects that can serve as the foundation for a growing, and more livable city.

Now is different. While the design, construction and real estate industry has not been immune to the consequences of the global downturn that began in 2008, construction activity in most sectors remains relatively brisk. Thanks to a progressive mayoral administration and a private sector that is largely upbeat about the City's prospects, the industry continues to generate more than $25 billion of activity and over 100,000 jobs annually across all five boroughs.

What is most impressive is the ability of the City's public and private sector leaders to keep moving on a series of important, forward-looking investments that, if realized, will benefit millions of New Yorkers for generations to come.

World Trade Center rising

Infrastructure Expansion Still on Track

Of all the enduring images of the 1970s fiscal crisis, few stood out more or took longer to mend then the deplorable condition of the City's subway system. As capital streams were raided to plug operating deficits, major transportation infrastructure was left to decay. It was only after decades - and billions of dollars - of investment that New Yorkers were once again provided with reliable, safe and comfortable daily commutes.

Tunnel boring for Second Avenue Subway

Given this history, it is remarkable that, despite the recent economic downturn, New York City continues to push forward with its largest transit expansion since the system was first built and numerous other infrastructure improvements.

• Work is progressing underground on the Second Avenue subway and the #7 line expansion.
• New money has been appropriated for Moynihan Station.
• Sandhogs are busy constructing tunnels to expand commuter rail capacity from the east and west of Manhattan.
• Work continues on the World Trade Center Transit Hub and the Fulton Street Transit Center, aided by federal funding, which promise to create a grand entrance to Lower Manhattan that rivals Grand Central Terminal in midtown.
• The New York City Department of Education is pressing ahead with an unprecedented $9 billion in capital commitments over the next four years to modernize its teaching facilities, while adding 30,000 new seats in 56 buildings across all five boroughs.
• The City's Department of Environmental Protection has committed $5.6 billion in the coming four years for its capital program, improving water distribution and wastewater treatment facilities Citywide.

The future front door for Moynihan Station

New Neighborhoods

The realization of large-scale projects typically occurs over several economic cycles, provided that government and private sector investors are willing to persevere during down times. When the economic bubble burst in the fall of 2008, many believed it would spell the end for or at least significantly delay a series of planned City-shaping investments.

Design of future Stapleton Esplanade, Staten Island

 

Brooklyn Bridge Park

Fortunately for New York, the principal stakeholders in these projects maintained their confidence in the City's future and were determined to overcome new obstacles, defying the naysayers.

Funding has been attained, lawsuits have been defended, and ground has broken on a new Brooklyn arena that will serve as the centerpiece of the Atlantic Yards development.
 

• Thousands of union hardhats pour into Lower Manhattan and the World Trade Center daily to construct vital infrastructure, two transit hubs, two modern office towers, and a Memorial to the victims of 9/11.
• The first phase of Brooklyn Bridge Park has opened and planning continues for redevelopment of Governors Island.
• An agreement has been reached to develop Hudson Yards as soon as demand for more office space and housing increases sufficiently.
• In Queens, construction crews are putting the finishing touches on the first phase of SkyView Parc, a $1 billion residential and retail complex in Flushing, and the City is moving ahead with plans to redevelop Willets Point.
• The Homeport, a 35-acre decommissioned U.S. Naval Base on Staten Island is poised to become a new, mixed-use community as part of the New Stapleton Waterfront Development Plan.
• Plans to redevelop the Hunts Point Peninsula in the South Bronx are underway and will include a new Food Distribution Center so vital to the area's economy.

Institutional Confidence

Rendering of proposed Whitney Museum with High Line in the foreground

New York City is recognized worldwide for the cultural, educational and healthcare institutions that define and give it strength. Because these institutions serve as a magnet for the best, brightest and most creative thinkers from all over the world, their ability to grow and remain relevant is crucial to New York's future.

Fortunately, a host of the City's most important institutions are moving forward with capital projects that will ensure their ability to grow and thrive in New York.

• Columbia, New York and Fordham Universities, as well as the City University of New York (CUNY), have unveiled detailed campus expansion plans that will unfold over many years.
• CUNY alone, which educates more than a quarter of a million people, has more than $1 billion in projects in the pipeline, including 11 currently under construction.
• The Whitney Museum recently approved construction of a new building near the High Line in Manhattan.
• The Museum of Modern Art, along with a private developer, recently won City approval for a mixed-use tower that will include three new floors of exhibit space.
• The Brooklyn Academy of Music broke ground on a new theatre to open the second phase of its ambitious expansion plan.

Rendering of the CUNY Advanced Science Research Center

The Challenges Ahead

Construction at 2 Gotham Center in Long Island City

That all of this forward-looking investment - which extends to affordable housing and emerging industries such as the biosciences - is occurring against the backdrop of a worldwide economic slowdown speaks to the foresight, determination, and confidence of New York's public and private sector leaders.

Of course, there is still a lot of ground to recover if the building industry is to return to pre-recession levels. Residential construction remains sharply off as a large number of permitted sites Citywide are stalled. It is vital that government, developers, and lenders continue work to find creative ways to jumpstart these projects.

Government leaders must also make substantial efforts to cut red tape, legal obstacles, and extraneous costs that make development in New York City more expensive and time-consuming for businesses and institutions. Too often, important initiatives, such as the Kingsbridge Armory, Atlantic Yards, and Columbia University expansion, have been stymied by excessive mandates and litigation.

Barclays Center at Atlantic Yards

The greatest challenge remains maintaining financing for infrastructure projects, which represent more than half of annual construction spending in New York City. Thanks to enlightened leadership, overall government spending has held up better than expected. Still, New York State is facing an annual budget gap of nearly $10 billion, which impacts not only its capital programs, but those of the City as well. Similarly, regional authorities, such as the Metropolitan Transportation Authority and the Port Authority of New York and New Jersey, have seen their revenues cut substantially as a result of lost economic activity.

Willets Point street view rendering

It is important that the building community strengthen its call for sensible and sustainable growth now and in the years to come; advocating continuation of the current rezoning strategy, easing of onerous mandates on private sector development, and expansion of investment opportunities in underserved areas of the City.

Working together with government and local communities, the design, construction and real estate industry can help ensure that New York remains a financial, educational and cultural capital of the world as it builds upon existing foundations and expands into new areas of growth. With this approach, the best is surely yet to come.