NJ’s Two-Year Construction Spending Estimate at $37 Billion

By Anthony Birritteri, Editor-in-Chief On Nov 3, 2016

Some 23 private- and public-sector agencies reported that construction spending over the next two years (2017-2018) will be $37 billion in the Garden State. The projections, revealed at the 32nd annual Construction Forecast seminar sponsored by the New Jersey Alliance for Action, represent a $2.4-billion decline from last year’s numbers. This may be due, in part, to three agencies not having estimates for 2018.

“All in all, the figures are good, with the utilities, office and industrial and higher education still major players [in construction expenditures],” said Alliance for Action President Philip K. Beachem.

Michael McGuinness, CEO of the National Association of Office and Industrial Properties (NAIOP) New Jersey chapter, revealed that his 750 member companies, which include developers, owners and real estate asset management firms, expect to spend $1.7 billion and $1.6 billion on construction projects in 2017 and 2018, respectively. He said that New Jersey is an attractive location for e-commerce companies (think: Amazon and other businesses that need warehouse space) because of our port facilities, transportation network and regional wealth. Office space demand is doing well in Morris and Hudson counties, but, overall, it is subdued with a lack of new product and many stranded assets. However, he added that transit villages are still major destinations for companies seeking office space.

Dana Hecht, director, division of project management for the New Jersey Department of Transportation (DOT), stressed the importance of voting “yes” on next week’s election public ballot question that requires all of the money raised by the recently increased gasoline tax be dedicated to the Transportation Trust Fund and be used for road, bridge and mass transit projects.

“For people who don’t think that the [gas tax] money is going to be directed towards the right places, I want to remind them that they have the power and control [over] that by voting ‘yes,’” Hecht said.

“It is our job to educate people that transportation is vital to the state’s economy,” she told the audience.  “I also want to let people know that it is our children and our loved ones who ride on those roads. … We need to keep the roads safe and functioning.”

Currently, the DOT has 170 projects “out on the street” valued at $2.3 billion.  For 2017, Hecht estimated spending would be in $950-million range.

Beachem said it was critical to renew the Transportation Trust Fund because New Jersey’s roads are in bad shape. “This is also critical for the construction economy,” he said.  “Lots of jobs and tax revenues are at stake. Having the TTF renewed in the manner that it was gives us a long-term, eight-year window in which DOT can properly plan.

“I think that the 23-cent hike, while it astounded some people, was the right number. One of the things I worried about was a solution that would have provided a small increase, which wouldn’t really do anything,” he said.

McGuinness told New Jersey Business, “Overall, the [TTF solution] is positive for the long term. I think it will energize the economy in many direct and indirect ways. We now have the tools to make some dramatic changes in order to improve everyone’s commute.”

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