Dino Tomassetti Jr, of Asset Realty & Construction Group is proud to say that even with the effects of the COVID-19 pandemic, New York City is proving to be as resilient as ever. The New York building market, currently feeding off the current workload and backlog, remains on top as the largest national construction market months into this challenging time. However, the Big Apple has to balance things out.
While the current workforce seeks to reach a plateau with current and projected construction volume, the sectors themselves are also seeing some dramatic changes.
Hospitality, commercial office, high-rise residential, retail, and higher education have been negatively impacted since the pandemic started. Projects that are moving forward in these challenging times are benefiting from a highly competitive bid environment, according to Gavin Middleton, chief operating officer at New York City-based project management firm Lehrer Cumming. Subcontractors are keen on securing additional backlog for 2021 and beyond, and the city is seeing a lot of competition for contracts and some compelling award numbers.
Offsetting these industry contractions, however, are other sectors that are demonstrating significant growth, including life sciences, advanced manufacturing, logistics, data centers, and last-mile delivery warehousing. The long-established shortage of qualified labor within the industry has only been further exacerbated by the present pandemic, leaving many general contractors, construction managers, developers, and project management firms seeking additional field staff.
Dino Tomassetti, Jr. mentions that before the emergence of COVID-19, projections for 2020 and 2021 indicated a slight two percent reduction in construction volume each year in the national markets. Within NYC specifically, construction spending remains somewhat constant for the same timeframe, despite a drop in the residential sector – a key driver for the local market during the past three to five years.
Looking ahead, construction employment within the New York market is projected to remain constant with a slight increase from 2020 to 2022, as per the New York Building Congress’ 2020-2022 New York City Construction Outlook. And, at least for the near future, the shortage of qualified labor will remain a key challenge for the industry to address.
Material pricing has also seen similar sporadic changes over the last several months. However, a bit of positive news is that with materials, in general, people can expect a plateau or a slight drop in price for the first time in almost a decade. Two materials to keep an eye on in terms of cost fluctuations are concrete and lumber. Both of their prices have recently jumped, as production facilities struggle to restart and as projects look to alterative green construction methods, which have put supply chains under additional strain, Dino Tomassetti, Jr. adds.