Slow Growth in Construction for New York, Pennsylvania, New Jersey and Delaware in 2008

Matthew Phair -- Associated Construction Publications, 12/20/2007

Mention the “R” word, and it can run shivers up the backs of contractors running on tight profit margins. But according to at least one organization that knows its way well around the construction forecasting business, 2008 looks like a year of slow but certain growth.

In the latest AEM outlook survey, growth in equipment purchased in the United States is expected to increase 2.8 percent. For more specific growth areas, equipment sales are one reliable measure of anticipated sector activity.

Business for bituminous equipment to increase 1.0 percent, while sales of concrete and aggregate equipment are expected to grow 5.2 percent. Earthmoving equipment sales are expected to decline 1.7 percent, while sales of lifting equipment are expected to increase 5.2 percent. The light equipment business is predicted to gain 3.7 percent, and attachments and components are expected to grow by 4.9 percent.

In the region, New York City continues to lead in terms of pure construction spending. Estimates exceed $25 billion for both 2008 and 2009. According to the New York Building Congress, spending is up across the board, including office construction, infrastructure improvements, new schools, expanded universities, and cultural institutions. Citywide nonresidential construction is forecast to reach $9.5 billion in 2008 and $11.2 billion in 2009. An analysis of the data finds that New York City is defying the nationwide slump in housing construction. Residential spending in New York City is projected to climb to level down to approximately $5.2 billion in 2009.

The Building Congress projects capital spending, including investments in mass transit, public schools, roads, bridges, and other essential infrastructure, to reach $12.6 billion in 2008 and 2009. Construction employment, which reached 116,600 jobs in 2006, is projected to increase to 126,700 in 2008, and top 130,000 in 2009. This total represents about 4.5 jobs per million dollars spent, which is down from 10 jobs per million in 1998.

The outlook is particularly strong due to the ongoing rebuilding in Lower Manhattan. In addition to the Freedom Tower and the Goldman Sachs headquarters, three additional World Trade Center towers, each about as large as the Empire State building, are slated to begin construction in 2008 and continue through 2012. Activity is also expected to pick up soon on Manhattan’s West Side, including the area around Penn Station and the Metropolitan Transportation Authority (MTA) rail yards.

Upstate, a handful of projects in Albany, Syracuse and Buffalo will keep building contractors busy, but the most significant project will be Corning’s new $300-million research and development facility, which broke ground in November.

In New Jersey, a record total of $30.7 billion in public and private construction over the next two years, despite the troubled national economy and New Jersey’s fiscal problems, is being reported by the New Jersey Alliance for Action.

The figures represented the highest amount in the 23 years that the alliance has held the forecast seminars. The new totals are 5-percent higher than the then-record $29.2 billion projected last year. The breakdowns for the two-year period were $14.1 billion for 2008 and $16.6 billion for 2009. Leading the way in the private sector for planned construction over the next two years was New Jersey’s Pharmaceutical and Medical Technology industry with $3.5 billion projected. On the public side, the Port Authority of New York and New Jersey was high with $3.7 billion.

In Pennsylvania, Pennsylvania Department of Transportation’s Deputy Secretary for Highway Administration Richard Hogg says that some of the administration’s top goals for 2008 are to improve bridges, delivery cost-effective timely projects, and enhance operations efficiency and security. Hogg made his comments at the Associated Pennsylvania Constructors annual meeting held November 18.

To improve the effectiveness of the monies spent, Hogg says the agency will be targeting major bridges, over 500 feet in length. With 652 of them in the state, their combined square footage equals over one-third (34 percent) of the state’s total deck area.

Also major to the commonwealth, after 50 years of planning, will be initial construction of the Intercounty Connector. A six-lane, 18-mile east-west connector between Pennsylvania and Maryland, the road will connect the I-270, I-370 and I-95/US-1 corridors. Five design-build projects will make up the effort, with the first $479 million awarded to a joint venture of Granite, Corman and Wagman.

In Delaware, one of the biggest challenges for 2008 will be the re-letting of the Indian River Bridge project. After settlement problems on the approaches has caused millions of dollars in losses and a need to redesign the new signature cable-stay bridge, the state is looking in possible damage claims against the design-build team.