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Construction Economics

Commercial Construction Holds Strong

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The two leading indicators of construction industry health both report that commercial construction might be improving, in the face of a difficult economic climate. The AIA’s (American Institute of Architects, New York) May Architecture Billings Index sank to its lowest level ever in March, at 39.7. However, in April, that number bounced back to 45.5. Anything above 50 is growth. This “rebound” prompted AIA chief economist Kermit Baker to state, “Even though the downturn in design billings has come on very quickly, most areas of the country aren’t showing signs of an oversupply of nonresidential facilities. That provides hope that this weak patch may be relatively short-lived.”
This was underscored by the McGraw Hill Construction report, which stated that the value of new-construction starts climbed 9% in April, with nonresidential building showing moderate improvement. Overall, new construction starts in the first four months of 2008 rose 3%. Nonresidential building in April grew 5% to $210.6 billion (annual rate), after dropping 25% in March. Healthcare facilities had a particularly strong April, jumping 41%, as five large hospitals broke ground. Substantial gains were also registered by two of the smaller institutional structure types. The amusement category soared 82%, aided by the start of a $400 million convention center expansion in Philadelphia, plus the start of several large theater and performing arts facilities in California, Florida, and Washington. Transportation terminal work climbed 52%, led by a $126 million terminal renovation at Miami International Airport and a $90 million terminal expansion at Washington Dulles International Airport. Church construction also helped out, climbing 10% in April. On the negative side, office construction eased back 1% and hotel construction dropped 5%.
What are you experiencing?—Gary L. Parr

November/December 2019

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