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THE CLOUDS GATHERING over development in New York City do have a silver lining: Soaring construction costs are showing signs of slowing.
After skyrocketing at an annual rate of 12% for the past three years, total construction costs are expected to rise between 7% and 9.5% this year. Though still double the rate of inflation, the slowdown could mark the beginning of a trend. Just as costs spiked along with the number and size of projects, so they are expected to ease as development does.
Construction activity is still brisk because many projects under way around the city were in the pipeline before the credit crisis hit last summer. But over the next few months, some contractors will probably find it difficult to line up more work. And that could lead to more competitive bidding and lower prices.
"Everybody is busy this minute," says Barry LePatner, a Manhattan lawyer who specializes in construction. "But in the months ahead, contractors will be finishing jobs and may not be able to find new projects."
The mortgage crisis is a double whammy for real estate development in the city, making it difficult for developers to secure financing for major projects and...
