Americans love to be entertained. That’s why the nation spends massively on the construction of arenas, stadiums, movie theaters, amusement parks, symphony halls and other recreational venues. In 2009, a brutal year for nonresidential contractors, the privately financed amusement and recreation category still generated nearly $8 billion in total construction spending, nearly half the level of private spending on educational construction that year. Publicly financed construction spending in the amusement and recreation category in 2009 totaled roughly $11 billion.
That said, 2009 saw a serious drop from the 2008 boom in amusement-related spending. The category slumped 29 percent to 42 million square feet in 2009, making it the third consecutive year of decline and the weakest level of construction since 1984, according to McGraw-Hill Construction. The most notable project was a $525 million baseball stadium for the Florida Marlins—not bad for a team that finished below .500 last year.
According to the U.S. Census Bureau, the dollar value of private construction put in place in the amusement-related category fell 26 percent, while public construction dipped 2 percent in 2009.
Through the first nine months of 2010, activity continued to slow across all segments, including arenas, casinos and convention centers. Even the onset of substantial, high-profile projects such as the $850 million redevelopment of Madison Square Garden, the $800 million Barclays Arena and the $400 million renovation of the Javits Convention Center—all in New York City—was not enough to avert a fourth consecutive year of decline in this category, according to McGraw-Hill. For the year, activity is expected to slide another 18 percent to 34 million square feet, but McGraw-Hill anticipates a gain of 1 percent in 2011.
The second largest sub-category of amusement-related construction spending in 2009 was sports venues. For several years, spending in this niche soared, with many of the nation’s cities touting shiny new football stadiums, arenas and ballparks. In 2004, roughly $900 million was spent on sporting venues. By 2008, this figure rose to $2.28 billion, an increase of 153 percent. But in 2009, spending declined to $1.6 billion in this category.
Other sub-categories also experienced significant declines in private construction spending in 2009. For performance and meeting centers, spending fell from $1.1 billion in 2008 to $781 million in 2009, a reduction of 29 percent. Spending on social centers declined even more, from $1.55 billion to $1.01 billion, a decrease approaching 35 percent. Spending on movie theaters and studios in 2009 was roughly a fourth of what it was two years earlier. In 2007, the nation spent nearly $1.2 billion on private construction in the movie category. Two years later, that figure stood at a paltry $321 million.
Looking Ahead
With the broader economy now improving, particularly the consumer segment, expect developers to become more motivated to move forward with projects in the amusement-related category. Improvement in construction spending could be gradual, however, given still disciplined lending standards in the financial community and the general lack of capacity on state and local government balance sheets to participate financially in large-scale endeavors.
Contractors and other stakeholders may have to wait until the latter half of the decade for activity to return to the levels associated with the 2006 to 2008 period.