Tuesday, August 9, 2011

Building Permits Jump


New construction permits in New York are on the rise, a sign that the city's ailing construction industry may be picking up steam.

Construction permits for new buildings, alterations and demolition rose by about 12% during the first half of 2011 compared with the same period last year, according to new data from the city Department of Buildings. Demolitions—generally an indicator that developers are starting projects—jumped 14%.

Large-scale projects have been hard to come by in post-financial crisis New York. The boost in new permits is an encouraging sign for the industry, but the numbers don't indicate whether these are large or small construction jobs.

And while the number of construction permits is an improvement from 2010 and 2009, they are still about 6% below the figures of the first half of 2008.

"More construction permits mean more people are going to work," said Buildings Commissioner Robert LiMandri.

New York's construction industry has been plagued by high unemployment since the downturn began. During the first quarter of this year, there were 101,200 people employed by the industry, according to New York Building Congress, a trade association. That's the lowest level since 1998.

"I think it's getting worse for us," said Jack Kittle, political director for DC 9 International Union of Painters and Allied Trades. Good construction workers who are usually in high demand typically don't show up to union halls unless they are out of work, he said. "That's when you know things are bad. I see a lot of them right now," he said.

Private developers are still having a tough time convincing lenders to finance big projects, said Richard T. Anderson, president of the New York Building Congress.

That has made the construction industry more reliant on public institutions such as the New York City School Construction Authority and the City University of New York for work, he added.

The rise in construction permits is "certainly a positive sign," but the improvement has been undercut by the number of stalled sites in the city, Mr. Anderson said.

There are about 650 stalled sites across the five boroughs, according to the Department of Buildings.

"They have been at a stubbornly high level," Mr. Anderson said.

Some projects have come back to life in recent months. Extell Development Co.'s 34-story International Gem Tower in the Diamond District started work recently after months of inactivity, said John Livingston, president of Tishman Construction Corp., which is building the tower.

More projects are on the way, he said. Tishman has begun preconstruction at the Donnell Library on West 53rd Street, where Starwood Capital Group and Tribeca Associates plan to build a $400 million hotel and condo tower.

"We got a lot in the queue," Mr. Livingston said.

In 2009 and 2010, there was a lot of pessimism among developers, but that has begun to shift, he said.

"There is a renewed confidence. We are cautiously optimistic about the future," he said.

Richard Lambeck, head of the construction management program at New York University's Schack Institute of Real Estate, said the increase in permits is encouraging.

But, he added, a bounce-back is far from certain.

The recent debt showdown in Washington, D.C., and plunging financial markets may give already-jittery lenders further cause for caution, Mr. Lambeck said.

"A lot of these [larger] projects are waiting for the economy to turn around," he said. "I think they are going to wait a little longer."



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