Construction, Economic Experts Discuss New York Metro Area Contractors' Concerns, Market Outlook
5/05/2009
NEW YORK—Residential real estate construction will bottom out in the first half of 2010 while non-residential construction will languish until early 2011, according to J.H. Cohn LLP’s Patrick O’Keefe, director of economic research. Office space surpluses and industrial and warehouse vacancies will continue to rise while the retail sector will remain under severe stress well into 2010.
At a recent presentation to the Architectural, Metal, Glass, and Storefront Contractors Association, O’Keefe detailed these national and regional economic trends impacting the residential and commercial construction markets. “With foreclosures on the rise and housing prices still in decline, builders continue to cut back on their planned activity,” stated O’Keefe, citing that there were nine percent fewer permits authorizing future construction in March 2009 than there had been in February. Compared to one year ago, permits were down 45 percent.
“We are a year out from what I predict will be the bottom for residential construction, and two years out for non-residential,” O’Keefe concluded, adding that rents and property values will likely decline into the first half of 2010.
Stephen Harrison, CPA and co-director of J.H. Cohn’s Construction Industry Practice, also presented to the Association, speaking about the leading causes of contractor failure and how contractors can best survive during the downturn.
“The key to surviving in the current economy is for contractors to focus on their core business and drive out inefficiencies where they exist, but to retain employees and capabilities critical to long-term growth,” said Harrison. “If contactors expand their core, they should consider joint ventures to mitigate the risks of tackling new project types or projects in new geographies.”
Harrison went on to emphasize the necessity to have rigorous estimating, billing, and accounting systems and practices in place to not only ensure that upcoming and ongoing jobs are profitable, but that risk is controlled and cash flow is stable during this volatile economic period.
Media Contact
Amy Koeppl
973-364-7837 / akoeppl@jhcohn.com