Construction industry makes gains in '95.

The New York City metropolitan area, in the midst of an economic recovery, continues to see business confidence levels grow, and more and more lenders willing to finance real estate and construction ventures. This has been a memorable year, due to the large volume of so many high-level projects, and 1996 looks even more promising.

Leasing transactions such as CS First Boston's enormous 1.1 million square-foot lease at Eleven Madison Avenue have restored investor's faith in the real estate market, which of course bodes well for the construction industry. Renewed confidence in the economy and an active leasing climate have also been key factors in the growth of the real estate and construction markets.

With more than $143 billion in construction contracts awarded nationally so far this year, many construction managers and contractors across the country are celebrating another successful year, and New York's contractors are no exception.

This success can be seen in many of the year's brightest projects, including AJ Contracting's construction of the 1.7 million square-foot Chelsea Piers Sports and Entertainment Complex, a $100 million development built on four historic piers off the Hudson River on Manhattan's West Side; the construction of the 240,000 square-foot office building known as Grand Concourse Plaza in The Bronx; and the interiors of the world headquarters of Morgan Stanley & Co. at 1585 Broadway in Manhattan. These large-scale projects are just a few examples of the resurgence of base-building projects and the increase of significant upgrades and conversions that are dominating the New York construction market.

Nowhere is the demand for base-building upgrades more prevalent than Midtown. Because of the brisk leasing environment and the limited supply of large blocks of contiguous space, the demand for major base-building upgrades will be the driving force propelling the New York construction industry in 1996. Furthermore, building owners, anticipating major lease roll-overs at the turn-of-the-century, are now beginning to make decisions to upgrade mechanical, electrical and power infrastructure of their buildings to retain existing tenants and attract new tenants.

Another factor spurring base-building upgrades and conversions will be Mayor Giuliani's Downtown revitalization plan, which aims to create the perfect work/live/play community in a traditionally work-only environment. Encouraging the renovation of many obsolete office buildings into residential buildings, this revitalization plan will undoubtedly spur new base-building development and major renovations. With more than 23 million square now available for lease, and 4 million square feet proposed for residential zoning, the opportunity for construction companies will be immense.

The retail sector is another industry that the construction industry is watching closely. Major big-box retailers have taken the area by storm, and will continue to aggressively move into the New York marketplace in 1996, requiring new construction to meet their demands. One such example of the retail market's viability is the construction of Atlantic Center, a massive retail and residential complex in downtown Brooklyn. AJ Contracting, construction manager on the project, is building 750,000 square feet of retail space and parking. The Center has already signed leases with Pathmark, Caldor, Marshall's, Old Navy and Sports Authority and is scheduled to open in November 1996.

The public sector, due to strong fiscal management at the state and local levels and the pro-business attitudes of the Pataki and Giuliani administrations, also has its share of major projects on line for 1996. Projects such as AJ's construction of the CUNY graduate center, which is relocating to the B. Altman building on 34th Street and Madison Avenue, and the $13.5 million renovation the United Postal Service Federal Office Building at 90 Church Street, are just two examples of the public sector's continued commitment to redevelopment in New York City.

With all of these exciting new prospects to look forward to in 1996, the construction industry is gearing up for another strong year. Although new construction projects will not reach the level of activity of the mid-80's, major upgrades will take their place, offering construction companies plenty of opportunity for growth. But construction firms must remember, the tightening of the market ensures that only those companies with a proven track-record of superior project management will reap the rewards.