NYBC projects $18.4b in construction spending.

Total construction spending in New York City is expected to reach a record $18.4 billion in 2005, according to a preliminary update of New York City Construction Outlook, an annual forecast and analysis prepared by the New York Building Congress.

This level of spending represents a modest 2.8% increase over 2004 levels.

Looking ahead, New York City construction spending could exceed $21 billion in each of the next three years. The update demonstrates that residential construction continues at a record-setting pace, with 27,500 new units expected to be authorized this year, up from 25,200 units in 2004. Nearly 30,000 units are projected for 2008.

Office construction has slipped somewhat in 2005, with only one major start (One Bryant Park) and seven other Manhattan buildings in development. The Building Congress expects this sector to rebound considerably with 11 buildings planned for 2006-2008.

Total 2005 non-residential construction, which includes office construction, as well as spending on other commercial space and institutions such as universities and hospitals, is expected to reach $4.5 billion in 2005, an increase of $450 million over 2004. Spending in this sector is forecast to exceed $5 billion annually through 2007.

Public sector construction spending has increased modestly, from $9.4 billion in 2004, to an estimated $9.7 billion in 2005. Based on the latest multi-year capital plans of government entities entrusted with New York City's infrastructure, however, public sector spending will accelerate to $12 billion in 2006 and reach $13 billion by 2008.

The Building Congress notes that the forecast is contingent upon public spending occurring as planned and the ability of the city of New York and its major public agencies to resolve funding uncertainties.

"While the construction outlook is indeed strong, much depends on the public financing capacity of local government and major public agencies," said Building Congress president Richard T. Anderson.

"The continued growth in the residential market is extraordinary and the strength of the institutional and infrastructure sectors is very reassuring. These investments have all kinds of positive implications for the city and point to a very strong overall outlook. There are questions, of course, such as the availability and cost of skilled labor and materials to support these spending levels. There will be inflationary pressures, no doubt."

The New York Building Congress prepared Construction Outlook with the assistance of Urbanomics, an economic consulting firm. It incorporates reviews of private construction data, as well as public capital budgets and plans at the city, state and federal levels.

The complete Construction Outlook 20006-2008 is expected to be published by March of 2006.