Report: Construction In NYC "Will Fall Off The Cliff" In 2013

Cancel those orders for more hardhats and scaffolding. After seeing a slight uptick since the first half of 2011, New York City construction companies are facing another spending drop in 2013, according to a new forecast from the New York Building Congress, a trade group. That’s when spending on several huge publicly funded projects is expected to finally end and when budget constraints are expected to keep city, state and local authorities from starting new ones, and when a weak economy is expected to keep private developers on the sidelines.

“In 2013 the construction market will fall off the cliff because public work will decline more, and private work is not picking up the slack,” said Richard Anderson, president of the Building Congress.

The builders are forecasting that construction spending in the city will fall to $23 billion in 2013, 15.7% below the anticipated levels of 2012, and fully 26% below the industry’s 2007 peak. That loss in dollars is expected to slim the total payroll in the industry to 91,800 in 2013, the lowest number since 1996.

Among the big projects expected to wind up by 2013 are the bulk of the work at the World Trade Center, the rehab of Madison Square Garden and construction of the Barclays Arena in Brooklyn, a trio that helped account for $10 billion of spending this year.

Since the recession, public-sector projects have grown to account for more than 60% of the market, and in the process have saved the construction industry from a far more severe slump.

This year, construction spending will reach $27.7 billion, down 1% from 2010. Next year is expected to be marginally stronger, with jobs in the sector rising by 2%, to 109,100. That projected total is still far below the 2007 peak of 132,600 jobs, and employment is expected to start slipping once again.

“As bad as the job losses have been to date, 2013 could be a painful year for a lot of local families if our employment projections hold,” Mr. Anderson said.

That remains to be seen, however. There are some signs emerging of a pick-up in residential building, which has been particularly hard-hit in recent years, with the number of new units completed this year expected to total just 7,0000, down from 30,000 a few years ago. Next year it looks like 11,500 will be completed.

Then too, if the economy strengthened, developers could quickly pull some projects out of mothballs. Developers have completed designs on about 20 million square feet of office construction like 2 World Trade Center and a 1.3 million-square-foot tower above the Port Authority Bus Terminal. What’s more, about 650 stalled construction sites litter the five boroughs, waiting for banks to finance the construction loans necessary to finish them.

“As city and state governments face growing deficits and with the federal government focused on debt reduction,” said Building Congress Chairman Peter Marchetto. “It looks increasingly likely that our industry will need the private sector to pick up the slack, if we are to maintain a stable construction market in the coming years.”