Construction starts in New York City were down 16 percent in the first half of 2012, the New York Building Congress announced this morning.
A total of $6.6 billion-worth of new construction projects launched in New York City during the first 6 months of this year, down from the $7.9 billion achieved in the first part of 2011 and down $4 billion from the first half of 2010.
The weakest sector in this time period was commercial and retail construction, which fell to $3.2 billion after achieving an encouraging $6.1 billion figure in the first half of 2011.
“I think that is the biggest question mark in this market,” said Richard Anderson, president of the New York Building Congress.
Among the factors affecting the number of construction starts for office buildings are the decline of amount of space per employee, a stagnant job market, and the number of lease renewals at existing properties.
“The cost of construction is so high, and when it is done, the property taxes are enormous,” Mr. Anderson added. “If we are going to continue to to be one of the world’s leading business centers, we need a vibrant office market. This means new state-of-the-art buildings, and right now we have not been building them,” he added.
Two of the most prominent construction starts in 2012 was the $400 million renovation of Macy’s flagship store at Herald Square and the ongoing renovation of the Winter Garden at the World Financial Center, worth an estimated $250 million. The start of Edward Minskoff’s 51 Astor Place was the most notable office construction start, despite being a modestly sized 12-story office building.
The overall drop in construction starts aside, the value of residential construction starts showed encouraging signs of improvement. That number jumped to $1.9 billion from $929 million in the first half of 2011, and was a welcome return to a billion-dollar figure in Mr. Anderson’s eyes.
“The trend is unmistakably in the right direction,” said Mr. Anderson.
Projects like The Avalon West Chelsea, Baccarat Hotel Residences New York, and 150 Charles Street all contributed to residential construction’s strong performance.
Public projects also saw an increase in the dollar amount of construction starts in the first half of 2012, going up to $1.5 billion from the $906 million during the same time period last year. Public sector projects like a $242 million plan to connect West 60th Street to the Third Water Tunnel and the Second Avenue Subway development contributed to the public sector’s strong first-half performance.