Construction boom brings fresh set of problems for the industry.

Speaking at a New York Building Congress meeting this week, Deputy Mayor Daniel L. Doctoroff hailed the "Golden Era in New York" reflected in the construction boom, but cautioned leaders about future threats to the industry.

Doctoroff's speech followed the release of the 2006 New York City Construction Outlook, which estimated total construction spending broke records in the industry this year, topping out over $21 billion. Yet fluctuations in the economy and changes in the market could swamp the industry in the future if we are not proactive, Doctoroff said.

"New York is becoming more and more expensive. At the same time, hard costs of construction this year were 39% higher than the national average."

Pressures could be compounded by an expected population growth of over a million and a half people in the next twenty years--the equivalent of the entire population of a small city like Miami--Doctoroff said. That population will create demand in the market and drive the need for more infrastructure.

"Much of our city is surviving on infrastructure that is mostly from the New Deal or earlier," Doctoroff said. "Our massive construction efforts, both public and private, must continue to unfold over the next two decades."

To help cut costs and help the industry grow to absorb those populations, Doctoroff advocated reducing red tape. He pushed for streamlining the cumbersome process of completing city projects that are estimated to add 6-8% to construction costs through fees and delays.

"When project managers question why it has been done that way, people say it has always been done that way. Well I for one am sick and tired of the way it has always been done. It is time to change the way it has been done so that the process makes more sense," Doctoroff said.

Doctoroff also advocated the abolishment of Wicks Law--the city law that mandates competitive bidding--in New York.

He cautioned of the need to prepare building materials for future projects which will be sorely needed as the boom continues. As an example, he cited future projects which are projected to require 7500 tons of steel--four times that being used today adding, "We must upgrade our ability to absorb this material."

Though changing neighborhood zoning laws could help more people to afford housing, residential projects must also be jump-started so that the supply exceeds the demand, he said.

"As we reduce our vacancy rates, we are going to start facing the question of costs all over again," Doctoroff said. "We will need to create 300,000 new spaces. We must create more supply if we want to make housing more affordable."

Doctoroff said he believed the city could absorb a healthy population growth that would keep the industry strong well into the future.

"If we invest wisely, if we can think ahead and plan creatively, we can, in effect, have it all," Doctoroff said. "But we have to be careful. We have to ensure we are not choking the golden goose."