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Construction spending set to reach historic peak

New York City construction spending is forecast to reach $61.5 billion in 2018, marking a 25 percent increase from 2017 and a new record for the city, according to the new report, Construction Outlook 2018-2020, released at a construction industry breakfast organized by the New York Building Congress.

Construction industry spending is expected to reach $59.3 billion in 2019 and $56.4 billion in 2020. Total construction spending between 2018 and 2020 will reach $177 billion. In addition, construction industry employment is poised to increase for the seventh consecutive year.

Following the release of the Construction Outlook, New York City Transit (NYCT) President Andy Byford and a panel of transportation experts from Lyft, Friends of the BQX, the NYC Economic Development Corporation (NYCEDC), and engineering and planning firm HOK discussed critical problems facing New York City’s transportation system and innovative solutions to address them.

“The construction industry drives New York City’s economy – it builds the schools, hospitals, train stations, bridges, roads, offices, and homes we use every day,” said Carlo A. Scissura, President & CEO of the New York Building Congress. “Our new report shows growth in nearly every sector. This boom equals more jobs for New Yorkers and a stronger economy across the state.”

During the breakfast, NYCT President Andy Byford acknowledged the challenges facing New York City’s subway system and called for immediate reliability improvements, a focus on enhancing the city’s bus system, accelerated accessibility at subway stations, and steadfast support for on-time, on-budget project delivery – as showcased in the agency’s Fast Forward Plan. He also called for a need to transform and modernize New York City Transit to be customer focused, agile, and accountable.

“It was a pleasure to speak to our critical partners and stakeholders in the construction industry at this morning’s breakfast,” said Andy Byford, President of New York City Transit. “The Fast Forward Plan, if funded, will bring about a complete renaissance of our public transit infrastructure, and our efforts at procurement reform will make it easier for companies of all kinds to do business with us. Ultimately it will be a win for all New Yorkers.”

Moderated by Nicole Gelinas, Senior Fellow at the Manhattan Institute, leaders in New York City transportation—John Horton of Lyft; Carl Galioto, FAIA, of engineering and planning firm HOK; Seth Myers of the NYC Economic Development Corporation; and Jessica Schumer of Friends of the BQX—discussed alternative means of transportation to supplement the subway, including ridesharing, bike share, the Brooklyn Queens Connector streetcar line, and proposed interborough light rail, and pushed for modernization efforts to rival those of other global cities.

The Construction Outlook is a signature publication providing a three-year analysis and forecast of construction spending and employment in New York, while also providing deeper insight into the factors that could shape the industry and New York City’s economy in the coming years. The latest release details a continued increase in construction spending over the next few years. Key points from the report include:Construction Employment on the Rise: New York City construction employment is poised to increase for the seventh consecutive year, totaling 158,000, surpassing 150,000 jobs for the second year in a row.

The Building Congress forecasts employment to dip slightly in 2019 – to 145,600 jobs – before leveling out to 147,700 jobs in 2020, which is seven percent more jobs than the average for the last five years.

Residential Construction Spending to Reach $15 Billion in 2019: The Building Congress anticipates $14 billion in residential construction spending this year, up from $13.2 billion in 2017. Residential spending, which includes spending on new construction as well as alterations and renovations to existing buildings, is projected to reach $15 billion in 2019 and $10.6 billion in 2020. The amount of new housing produced is forecasted to reach 60,000 units over the next three years. Though the forecast is down from 27,800 in 2017, it is above the average from the previous decade.

Non-Residential Construction Spending to Reach $39 Billion in 2018: Non-residential construction spending, which includes office space, institutional development, sports/entertainment venues, restaurants and hotels, is expected to reach $39 billion in 2018, up from $23.5 billion a year ago. The Building Congress forecasts construction spending in the non-residential sector to drop to $30.4 billion in 2019 and $23.4 billion in 2020.

Infrastructure Investment to Have Increased by 32 Percent by Year’s End: While private sector investment remains the primary driver of construction, government infrastructure spending has increased each year since 2015 and is predicted to continue increasing through 2020. Government spending on public works, which includes investments in mass transit, roads, bridges, and other essential infrastructure, is expected to reach $19.5 billion in 2018, a 32 percent increase from 2017 when spending reached $14.8 billion. Spending in this sector is anticipated to increase further to $23 billion in 2019 and $24 billion in 2020.

New York City to Spend Over $9 Billion on Infrastructure This Year: The City of New York is forecast to spend $9.1 billion on infrastructure in 2018, up from $7.4 billion spent in 2017. The Building Congress anticipates City spending to continue increasing, to $10.9 billion in 2019 and $11.1 billion in 2020.

MTA Spending to Near $2 Billion by Year’s End: The Building Congress foresees construction spending by the MTA to increase to $7.2 billion this year from $5.1 billion in 2017. MTA spending is anticipated to increase to $7.9 billion in 2019 and $8.5 billion in 2020, which represent robust spending numbers as the MTA cycles through its largest-ever five-year capital program.

Port Authority Spending to Increase Significantly, to Nearly $3 Billion in 2019 and 2020: The Port Authority of New York & New Jersey is expected to invest $1.9 billion this year in New York City capital projects, up from $1.2 billion in 2017. The Building Congress estimates that Port Authority construction spending in the city will increase significantly in the coming years to $2.9 billion in both 2019 and 2020.

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