Public-private partnerships key to NJ construction

Real Estate Weekly, Jan 25, 1995 by Thomas J. Spearing, III

If construction gains made in 1994 are any indication, New Jersey's sagging building industry will see growth in 1995. While the upswing will not be as dramatic as the building boom of the late 1980s, the Garden State's business community can look forward to several new commercial and infrastructure projects coming on line. That growth, albeit small, could signal that the industry is now moving toward steady recovery.

Good news for the state has been long in coming. New Jersey's building and economic boom ended in 1987 and by 1992, the state's labor market had reached its recession low. More than 260,000 jobs have been lost since 1989. Hardest hit was the state's once-flourishing manufacturing industry, reporting a loss of 24,600 jobs statewide.

New construction was severely affected by the faltering economy. Employment in the state's construction industry, on both residential and commercial construction projects, dipped to its lowest point in 1992. Residential construction was the hardest hit and will take longer to fully recover than commercial and other non-residential construction industries.

Residential construction in the Garden State has increased very slowly, and with troubling inconsistency. In fact, figures compiled by the state Department of Labor indicate that 14 percent fewer new homes were built in the first half of 1994 than during the same period in 1993. This decline may be attributed to last year's harsh winter, rising mortgage interest rates and a continued, general reluctance to buy new homes.

Nationally, however, the number of new homes built over the past year has risen more dramatically. As of July, new home starts across the nation were up 16 percent from 1993. This national increase, as well as statewide spending and hiring increases, could mean better numbers for New Jersey home starts in 1995. As more residents regain lost jobs and the confidence to spend more in the retail sector, they eventually will feel better about buying new homes.

Commercial and other non-residential construction have fared far better during 1994 and will continue growing in 1995. Contracts for non-residential and infrastructure projects rose two percent and 12 percent, respectively, from last year, according to the state Labor Department.

Already, such gains are becoming evident, especially in southern New Jersey. From the construction of a new convention center in Atlantic City to an agreement to build a performing arts center on the Camden waterfront, South Jersey is booming with record-setting investments that could bring hundreds of new jobs to the region.

Many new projects are the result of the growing trend toward private/public partnerships. In Atlantic City, for example, the New Jersey Sports and Exposition Authority is funding the new convention center, and the Casino Reinvestment Development Authority is purchasing land around the center for non-casino development. Meanwhile, Caesar's Hotel-Casino is working with other private interests to build a hotel near the center.

In Camden, Sony Music Corporation, PACE Entertainment Corporation and Blockbuster Entertainment Corporation are teaming to build the performing arts center. Although most of the costs associated with the theater will come from the corporate trio, public subsidies will help prepare the site for construction.

In Cumberland County, several hundred new jobs will result from construction of Wheaton Worldwide and the Cumberland Crossing Shopping Center in Millville. The Cumberland Mall is also expanding in Vineland, and in Bridgeton several national chains are expected to set up shop in a new retail strip center.

A co-generation plant, the Pennsville Marketplace and a revitalization of Public Service Electric & Gas' Artificial Island complex are precursors to job growth in Salem County. Construction industry employment in that county alone grew more than 30 percent in 1993 and business inquiries to the county's economic development department have increased substantially over the past year.

In Ocean County, New Jersey's largest industrial park is getting even bigger. Lakewood Industrial Park, home to more than 200 businesses that together employ nearly 11,000 people, is poised for growth in 1995. An estimated 30 new businesses will find a home at the park in the new year.

While new construction in 1995 may not match the pace of the last decade, legislative and business leaders are optimistic that New Jersey's growing economy will result in, at least, modest improvement.