Capitalize on building boom by planning for the future.

The first three quarters of 2005 were highlighted by significant growth in the building industries. As we look back over the past year, there have been so many projects in new development, adaptive reuse projects and renovations, that I believe we will collectively regard this as an exciting time to be a construction firm in New York City.

Even with all of this activity currently underway, we remain cautious of what the true impact will be regarding rising costs in materials, fuel, labor and interest rates. Clearly, high oil prices and natural disasters are beginning to have a slight impact on us locally, but if as an industry we plan ahead, we should continue to benefit from this amazing building trend.

For those of us who have been in the construction business for a long time, we know that there are naturally occurring cycles. Fortunately, the current upswing has been going on longer than initially predicted and may be more consistent than past cycles. It is easy to speculate that it may be a more solid boom than those over the past two decades because the development that is occurring now is truly based upon supply and demand, particularly in the residential sector.

Among our primary concerns in the construction industry are the availability of material and equipment, and the impact of high fuel costs. In anticipation of these key factors, ACC Construction has already begun helping our clients plan ahead with respect to their construction requirements in the upcoming year.

Our project managers are working with clients to identify such key items as HVAC units, lighting, electrical equipment, etc., that are needed for upcoming projects, and are pre-purchasing those items to help condense project schedules.

Pre-purchasing lead items helps to ensure that planned projects are completed within the client's construction schedule. In addition, ordering long lead items now will enable our clients to avoid the additional costs of quick shipping, which are also rising due to increases in the cost of fuel.

Clearly, higher fuel prices are having an impact on current construction costs--ranging from increases in manufacturing to the cost of carting services. We are taking these factors into consideration when assisting our clients with their construction budgeting for upcoming projects.

Value engineering can be very helpful when working with strict budgetary constraints and may help offset some of the cost increases the industry is facing.

As general contractors and construction managers, ACC provides the expertise and knowledge to design teams that directly results in overall project cost reductions.

Ten years ago, we began a strategy that included diversifying our client base and service lines to address the kinds of challenges we are now facing today. Although ACC Construction was always active in commercial office and retail build-outs, we have expanded our client base to include residential, education, hospitality and healthcare markets.

In keeping with this strategic program, we added new service lines that encompassed large-scale residential renovations and out-of-ground construction. Although our bread-and-butter base remains corporate interior build-outs, this strategy has prepared us for the current circumstances and has enabled us to provide a variety of construction services to several different markets.

In the past three-quarters of 2005, ACC Construction has been awarded a number of office build-outs in midtown and downtown Manhattan. The office market is still active for office build-outs ranging from 5,000- to 50,000 square feet.

The types of companies we are working for cover a wide variety of businesses, such as law firms, advertising agencies and financial institutions. I believe this kind of activity reflects a palpable excitement in the city, as reinforced by the low vacancy rates in office buildings and new development.

In order to maintain this vibrancy, it is important that the various building industries work together to prepare for costs increases, and help determine what the impact will be when materials are diverted for relief efforts in the South.

Early measures of preparedness will benefit local real estate professionals across the board, from owners and managers to construction companies, vendors, architects, engineers and so on. Even the end-users, i.e., homeowners, cooperative corporations and condominium associations, need to assess their requirements for the near future and prepare accordingly.

Despite the challenges we may be facing, this is an exciting time to be a New York-based construction management and general contracting firm. As one of the few local Woman-owned Business Enterprise (WBE) construction firms, there is also a broad and eclectic range of private and public sector projects available to us in the upcoming months.

Within the past two years, ACC Construction has worked on commercial, residential and retail projects all over the city.

We have completed major capital improvement projects on apartment buildings that included massive renovations on common areas and, literally, hundreds of unoccupied and occupied units. In the first two quarters of the year, we re-built from ground up a popular downtown restaurant that had been demolished due to damages caused during 9/11.

There were also three major hospital projects this year, along with eight Cold Stone Creamery stores and the build-out of the entire mezzanine floor of one of the world's most famous Fifth Avenue luxury retailers.

All in all, it has been a very good year for ACC Construction--and the entire real estate industry.

As we are constantly diversifying our portfolio, we continue to remain optimistic for the fourth quarter of 2005.

MICHELE MEDAGLIA, PRESIDENT, ACC CONSTRUCTION