Friday, April 18, 2008

NY'S SECRET BUILDING BOOM

By RICHARD ANDERSON NY POST

For all the economic doom and gloom we've been hearing, private-sector construction has been going gangbusters. But with several big-ticket public construction projects teetering, the question is: Will New York City's infrastructure keep pace?

Certainly, headlines on major city, state, Port Authority and MTA construction jobs haven't been pretty lately.

Financing has become an issue at the massive Brooklyn Atlantic Yards project. Madison Square Garden indicates that it's backing out of the $14 billion Moynihan Station project. Cost overruns are stretching the budgets for such major transit projects as the Fulton Transit Center and the No. 7 line extension

But these disappointing signals don't spell the end for the city's unprecedented building boom. The city set a record for construction spending in 2007 - an eye-popping $24.6 billion. The New York Building Congress forecasts that spending will top $25 billion this year and next year, too, despite announced cutbacks.

While the public megaprojects generally serve as a building boom's face, its strength rests in the breadth of construction activity, which continues to stretch across all five boroughs and throughout every category of building - including robust activity in the residential, commercial, hospitality, infrastructure, cultural, educational and health-care sectors.

Many factors that led to the record activity are still at play:

* New York needs to produce 20,000 housing units a year to keep up with population growth and replace aging units. Despite the well-documented housing boom of recent years, demand remains intense because we're still playing catch-up from the '90s, a decade in which new-housing production routinely fell below 10,000 units a year.

* The office sector - though heavily affected by economic trends - has some of the lowest vacancy rates and highest prices recorded. New York City lost some 13 million square feet of office space on 9/11; little was built in the following years. Yes, there'll be some drop-off in office-building activity, but with the World Trade Center, Goldman Sachs and Bank of America projects under construction, the pace will remain strong at least through 2009.

* The Bloomberg administration has adeptly overseen 79 rezonings, which have unlocked tremendous development potential in neighborhoods throughout the five boroughs and will facilitate construction of more than 45,000 housing units and 40 million square feet of commercial space.

* Even the institutional sector, which includes entertainment, culture, education and health care, will demonstrate strength based on the ongoing construction of major new sports venues, the sustained influx of record numbers of tourists and major expansion programs, such as the one at Columbia University.

* Of all categories, again, the one most imperiled during lean times is government-construction spending, which accounts for half of all New York construction. Even here, a number of major infrastructure and transportation projects are already funded through the next few years.

Yet building for the city's future requires steady, multi-year investment in transportation, schools and other infrastructure needs. The state and local governments must continue to fund these projects even during difficult times. That's why such mechanisms as Mayor Bloomberg's now-dead congestion-pricing plan are so important: They provide a steady and dedicated flow of revenue for public projects.

It's possible and highly probable that megadevelopment projects and some infrastructure work will take longer to build out and that some plans might not be realized. But given all the positive indicators, it's hard - even in this economic climate - to envision a significant deterioration in building activity anytime soon.

The city's private sector will keep moving forward, if at a somewhat less breathless pace.

Let's hope the government does its part, too.

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