New York gets ready for construction boom.

New York City's economic rebound from the devastation of 9\11 will continue to make the balance of this decade an amazing and historic period in its history.

While on a broader scale there are both positive and cautionary notes, prospects for our city and the metropolitan area as a whole appear to be optimistic for real estate, design and construction industries.

When we first look at the national construction picture, one cannot but be impressed with the steady growth of the construction market.

In spite of new levels of inflation, including run-ups in record prices for oil and steel over the past few years, we have seen increases of 8.9% for 2004 in new construction and anticipated further growth of 2% for 2005, according to McGraw-Hill's Construction Dodge's Report.

This is due in large part to record levels of residential and educational construction, which have offset declines in industrial and commercial work.

Closer to home, New York City's economy has seen significant upward shifts, as evidenced by the sharpest improvement in unemployment, a mere 4.9% in November 2004, down from 5.2% in October and 6.3% in November 2003. Add to this the financial strength of the city's all-important financial sector and a surge in foreign tourist spending because of the weak dollar and you have clear evidence of optimism for the year ahead.

More significant are the signs that New York City is in the early stages of a true five-borough economic improvement.

New development is bringing construction to all parts of the City. Major development is on tap in Long Island City, where Silvercup West, a proposed mixed-use development with approximately 200,000 s/f of studios, residential housing and retail space, will soon begin its public review process.

The Queens Borough Board also recently approved a plan for a five-year program to develop Queens Plaza, which would involve the construction of 1.5 million s/f of office space and the creation of 6,000 jobs.

In Brooklyn, residential development has begun to transform Williamsburg and the anticipated Forest City Ratner development, which will include a new Frank Gehry-designed Nets arena with accompanying retail and housing components, will radically transform the center of the borough.

West Side development includes the recently approved expansion of the Javits Convention Center in Manhattan.

The rezoning of Hudson Yards is also on the boards. In addition, the proposed $3 billion expansion of Columbia University's Manhattan\West Harlem Campus will, according to a report from the New York Building Congress, generate $1 billion in economic activity per year during its development.

Cautionary warnings, however, have been raised from some quarters of the economy. These include concerns over the fact that absent a major investment by the City in capital costs for commuter rail and subway access to midtown, the City will find itself hampered by crowding that will slow our economy's growth potential.

A recent report by New York University warns that unless four new projects are developed--new rail tunnels under the Hudson River to Pennsylvania Station and under the East River to lower Manhattan, as well as the development of the Second Avenue subway and a Long Island Rail Road connection to Grand Central Station--"New York risks the possibility of having a real ceiling on the economic growth of the financial capital of the country."

Much of the potential for progress in the next few years can be held hostage to politics on the state and federal levels. Washington's and Albany's continued willingness to keep their commitments to fully fund the mega-projects that are reshaping Ground Zero are crucial.

Without that support, the projects could be a huge drain on the limited resources of the City to fill the residential and commercial high-rises on the drawing boards and under construction.

Rising interest rates could radically change the pricing points for many new projects and cause a rescaling of the sales prices for rental and condominium projects currently under construction.

Offsetting these potentially unsettling concerns would be the designation of New York City as the home for the 2012 Summer Olympics, a major goal of the Bloomberg administration.

Such designation would lead to billions of dollars of new residential and stadium construction, keep the construction industry going full force for the next seven years and make the New York metropolitan area a focus of worldwide attention.

In short, we are in for an interesting ride in the next year. My recommendation is "Stay tuned!"