Building Expectations: The Next Big Construction Sites
Across the city, hundreds of hammers are poised midair. Many believe that development will be frozen for years to come. But while the sight of New York City’s 600 stalled construction projects is difficult to ignore, those deep inside the industry say signs of a new boom are beginning to appear.
“It seems that there’s going to be a loosening of the activity in terms of giving money to these projects that have stalled,” said Richard Lambeck, chair of the Construction Management Department at N.Y.U. “It may be a slow start, but by the end of the year, things are going to pick up moderately, although not dramatically until 2012.”
F.J. Sciame Construction, for example, one of the city’s most prominent firms, reports a $1 billion backlog. The firm is expected to have record years in 2012 and 2013, besting its previous top year in 2008. Reflecting a wider trend, much of the company’s work is public or institutional: the Heschel School on the West Side, a Judd Foundation building in Soho, Roosevelt Island’s Four Freedoms Park, a theater in Coney Island and a skating rink in Prospect Park.
Likewise, Plaza Construction has shifted more toward public work throughout the recession, and its president, Richard Wood, said the company is poised to grow as the private sector revives and demand for public and institutional construction, especially for major private universities, continues.
Other major firms—including Bovis Lend Lease, Skanska USA, Structure Tone and Turner Construction—did not respond to requests to comment for the story, but a survey of major developments, conducted by The Commercial Observer thanks in part to a list provided by Robert Sammons of Cassidy Turley, reveals numerous developments could go ahead if financing starts to flow more freely and job growth continues.
But those are both big ifs.
The New York Building Congress predicts a modest increase in activity in the industry this year, from $23.7 billion to $25 billion. Public construction work has taken a much larger chunk, increasing from 45 percent in 2008 to an anticipated 65 percent in 2011 (although some of this depends on the M.T.A.’s uncertain budget).
Many say that activity will continue increasing over the next few years, but it’s difficult to imagine how it could reach boom levels of $31 billion a year in 2008 (see accompanying charts). “The residential market has declined so precipitously, I don’t think it will go very far up,” said Building Congress president Richard Anderson. As for “offices, which have always been a big part of the construction market in New York City, the outlook is equally discouraging,” he said.
Consider, for example, 510 Madison and 11 Times Square, which, while elegant and environmentally friendly, also arrived unfashionably late to the party, flooding the market with millions of square feet of office space when millions more were already vacant. But 11 Times Square is now half-full thanks to a huge lease by law firm Proskauer Rose, and there are rumors of smaller deals to come. Meanwhile, 510 Madison is signing deals north of $100 a square foot, CB Richard Ellis broker Paul Amrich recently told The New York Times.
The demand for these shiny new spaces, in defiance of the overall market, proves an important point: We may not need a lot more space, but we desperately need new space.
As Cassidy Turley’s Mr. Sammons said, New York City will start losing companies if our aging office infrastructure doesn’t reflect modern needs. “In Asia, they’re able to push things through and just clear an entire neighborhood and [build] 25 high-rises. … It’s a good thing that you can’t do that here, but a major tenant doesn’t care.” However, he added, “the culture and desire for people to live here has helped save New York.”
But this raises the troubling question: In the race to keep up with the rest of the world, will we end up building too much too fast? As Frank Sciame, head of his eponymous construction firm, noted, “Everyone has short memories. I predict there will be another financial euphoria and building will start.” Couldn’t that cause the market to overheat yet again? Well, he said, backtracking slightly, perhaps the events of 2008 will stick with us somewhat.
Herewith, where the hammers will likely fall first and loudest in the coming year and a half.