Tag Archives: Construction spending

rsz_emerson_court-1

Construction Spending Slips As Residential Market Pauses; Private Nonresidential, Public Spending Decline

 

Total construction spending cooled in June as residential building hit the pause button, while private nonresidential and public construction also declined, according to an analysis of new Census Bureau data by the Associated General Contractors of America.

Association officials urged lawmakers in Washington to make infrastructure investment a top federal priority for the fiscal year beginning in October.

“New single-family and multi-family construction both had rare slowdowns in June, while private nonresidential construction remained stuck in neutral as it has all year and the long slump in public construction worsened,” said Ken Simonson, the association’s chief economist. “For the rest of 2013, private construction appears likely to grow again but public spending is showing no signs of a recovery.”

Construction put in place totaled $884B in June, down 0.6% from May but up 3.3% from June 2012. Those earlier figures included steep upward revisions to residential improvements as the Census Bureau corrected improvements data back to January 2012. Despite the dip in June, spending that month was still the second-highest level since August 2009.

Private residential spending was flat for the month and 18% higher than in June 2012. New single-family construction slid 0.8% in June but was 28% above the year-ago mark. New multi-family spending fell 3.3% in June but shot up 41% year-over-year.

Private nonresidential spending slipped 0.9% in June and rose 1.4% year-over-year. Public construction spending shrank 1.1% for the month and 9.3% over 12 months.

“The major private nonresidential segments show divergent trends,” Simonson said. “Power construction, which includes oil and gas fields and pipelines as well as electricity, climbed for the fifth straight month in June, even after Census posted large upward revisions for May and April. But such major categories as manufacturing, health care and retail construction remain in the doldrums. Meanwhile, the largest public categories —highways and education construction — are now plummeting at double-digit rates.”

Association officials warned that the plunge in public construction will worsen unless policy makers in Washington can produce a budget that puts more money into vitally needed highway, water and other infrastructure projects. They noted that spending on federal projects in June was at the lowest level since September 2008 and was 29% below its latest peak in August 2011.

“Infrastructure spending is essential for economic growth, health and safety,” said Stephen E. Sandherr, the association’s chief executive officer. “Congress should make adequate funding for infrastructure a top priority next month when it works on appropriations bills to fund the government for the year beginning in October.”

 

rsz_emerson_court-1

Construction Spending Rebounds in February With Private, Public Gains

 

Construction spending rebounded in February with gains from depressed January levels in residential, private non-residential and public investment, according to an analysis of new Census Bureau data by the Associated General Contractors of America.

Association officials cautioned that the rise in public investment was likely to be short-lived and urged policy makers in Washington to make infrastructure investment a priority.

“It is encouraging to see growth in both monthly and year-over-year totals in private residential and nonresidential construction spending,” said Ken Simonson, the association’s chief economist. “There are increasing signs that 2013 will be a good year for a wide variety of project types.”

Construction put in place totaled $885B in February, up 1.2% from the downwardly revised January level. The February 2013 total was 7.9% higher than in February 2012. Private residential construction jumped 2.2% for the month and 20% year-over-year. Private nonresidential spending rose 0.4% for the month and 6.1% year-over-year.

Public construction spending increased 0.9% for the month but slipped 1.5% over 12 months.

“There is little doubt that construction of new houses and apartments will continue to boom in the next several months, based on data covering recent housing starts and building permits, as well as reports of rising rents, occupancy rates and new-home sales in many markets,” Simonson said. “On the nonresidential side, there should be a lot of activity involving pipelines, manufacturing, railroads and trucking, and warehouses.”

New single-family construction rose 4.3% from January’s level and 34% from a year ago. New multi-family construction fell 2.2% for the month but was 52% above the February 2012 mark.

The largest private nonresidential category, power construction — which includes oil and gas fields and pipelines as well as power plants, alternative energy and transmission lines— increased 0.7% for the month and 4.0% over 12 months.

Manufacturing construction rose 0.3% and 9.9%, respectively. Private transportation construction slumped 2.4% in February but climbed 17% year-over-year. Warehouse construction soared 8.3% and 19%. New and remodeled private office construction rose 0.3% and 25%.

Association officials said federal infrastructure investment has been plunging even as several states have passed funding increases for projects. Federal investment in construction dropped 1.1% in February and 10% from a year ago, while state and local investment rose 1.1% for the month and was nearly level — down 0.5% — year-over-year. They urged the federal government to fund vitally needed investments in infrastructure projects.

“The nation has been underinvesting in infrastructure for years,” said Stephen E. Sandherr, the association’s chief executive officer. “With funding set through September, it is time for Washington to work on finding adequate funding in the next budget.”

 

rsz_emerson_court-1

Construction Spending Slips in November, But Rises From A Year Ago

 

Construction spending dipped from October to November, but resolution of the uncertainty regarding federal taxes for 2013 should unleash more private construction investment, according to an analysis of new federal data released today by the Associated General Contractors of America.

Association officials warned, however, that unresolved issues about federal construction spending, including storm relief for northeastern states, will hold down public construction spending.

“Preliminary data from the Census Bureau for November shows overall construction spending slipped 0.3% from October’s total after seven months of steady gains,” said Ken Simonson, the association’s chief economist.

“The more significant comparison, however, is with year-ago levels, and the November report shows a respectable 7.7% gain over the past 12 months.”

Simonson noted that private single- and multi-family spending continued growing strongly. Spending on new single-family houses climbed 1.3% for the month and 29% year-over-year. Multi-family spending rose 0.5% and 46%, respectively.

“Private nonresidential construction has been in a holding pattern for the past several months, but last night’s passage of a tax bill should encourage many businesses to go ahead with projects they have held in reserve,” Simonson predicted. “Despite a drop of 0.7% in November, the year-over-year total was up by 8.2%, and this figure appears poised to return to double-digit percentage gains in the next few months.”

Simonson pointed out four categories of private nonresidential construction that posted increases of more than 10% between November 2011 and November 2012, although results for the latest month were mixed. Lodging construction declined 1.3% for the month but jumped 26% over 12 months.

Office construction shrank 0.9% from October but grew 17% from November 2012. Private transportation construction, principally by rail and trucking companies, added 3.4% for the month and 16% year-over-year.

Power and energy construction, including spending on oil and gas fields and pipelines, contracted 1.4% from October but rose 14% over 12 months.

Simonson observed that public construction spending, which has alternated between monthly increases and decreases in 2012, sank 0.4% in November and 2.6% year-over-year. He said the two biggest categories of public spending both rose for the month but declined from November 2011 levels.

Highway and street construction spending was up 0.5% from October but down 6.0% from a year ago. Educational construction spending rose 0.1% for the month but fell 3.4% from year-ago levels.

Stephen Sandherr, chief executive officer for the construction trade association, urged Congress and the administration to make infrastructure investment a top priority in 2013.

“Congress and the president have provided some tax certainty that provides a foundation for economic growth,” Sandherr said. “But their jobs are far from completed. It is vital that the states devastated by Hurricane Sandy receive funding immediately for recovery work. In addition, lawmakers should not target construction spending for further cuts when they turn to spending decisions in the next two months.”

 

 

rsz_central_station

Construction Spending Hits 3-Year High in September

 

Construction spending in September climbed to a nearly three-year high at an annualized rate of $852 billion, as increased spending on houses, apartments and private nonresidential projects outweighed a continuing downturn in public construction, according to an analysis of new federal data released today by the Associated General Contractors of America.

Association officials said they expect both the public and private trends to continue despite the disruption caused by Hurricane Sandy.

“It is heartening to see the growth in total spending, but the progress remains fragile and fragmentary,” said Ken Simonson, the association’s chief economist, noting that construction spending had dipped the previous month and that spending in several categories remains lower than in September 2011.

“In the wake of the massive losses from this week’s storm, many construction priorities will be reordered, but overall private and public spending patterns are likely to stick unless federal and state lawmakers devote more funds to construction.”

Simonson noted that total construction spending rose 0.6% for the month and 7.8% from September 2011 to September 2012, bringing the total to the highest level since October 2009. Private residential spending accelerated, increasing by 2.8% compared with August and 21% during the past 12 months.

Private nonresidential construction, however, inched down 0.1% for the month, but remains up 8.8% for the year. Public construction shrank 0.8% in September and 4.2% year-over-year.

Within the private sector, all three residential categories did well. New single-family construction increased 3.9% for the month and 26% over 12 months. New multi-family construction rose 1.3% for the month and 49% since September 2011. Improvements to existing residential structures — a category likely to get a large boost from storm reconstruction — climbed 2.0% in September and 12% over the year.

Among private nonresidential categories, the largest — power construction, which includes oil, gas and other energy projects — rose 1.1% for the month and 20% over 12 months. Manufacturing construction was up 3.8% in September and 1.3% year-over-year. Commercial construction, comprising retail, warehouse and farm structures, dropped 3.8% in September but posted a 12-month gain of 4.4%.

Public construction fell for the third straight month, with declines in the two dominant categories. Highway and street construction spending decreased 1.6% in September and 2.4% year-over-year, while educational construction spending slipped 0.8% and 6.9%, respectively.

Stephen Sandherr, chief executive officer for the construction trade association, called on public officials to make available extra funds for rebuilding. “Lawmakers cannot merely raid one part of their construction budgets to make urgent repairs at a time when funding for infrastructure is already inadequate,” he said. “Stabilization and restoration of the hard-hit infrastructure in the Northeast should supplement, not crowd out, long-needed projects elsewhere and in that region and nationwide.”

 

Construction Spending

Construction Spending Reaches Highest Level Since December 2009

Construction spending in June rose to a 2-1/2 year high as double-digit percentage increases in private residential and nonresidential construction more than offset an ongoing downturn in public construction, according to an analysis of new federal data released today by the Associated General Contractors of America. Association officials said they expect the disparity between private and public construction is likely to persist and urged policy makers to put more funding into infrastructure projects.

“The June spending gains come on top of upward revisions to May and April totals, reinforcing the notion that private construction is now growing consistently,” said Ken Simonson, the association’s chief economist. “Even more encouraging, the improvement is showing up in a wide range of residential and nonresidential categories.”

Simonson noted that total construction spending gained 0.4% for the month and 7.0% year-over-year. Private nonresidential spending climbed for the fourth consecutive month and was 14% higher than in June 2011. Residential construction increased 1.3% for the month and 12% year-over-year, with new multifamily construction soaring 3.4% and 49%, respectively, and single-family homebuilding up 3.0% and 19%.

The construction economist said that five of the 11 private nonresidential categories in the Census Bureau’s monthly report registered double-digit percentage gains in spending from June 2011 to June 2012: power and energy construction (including oil and gas-related projects), 26%; hotels, 26%; manufacturing and educational, 19% apiece; and transportation (mainly trucking and rail facilities), 17%. There were also 7% year-over-year increases in health care, commercial (retail, warehouse and farm) and office construction.

Public construction spending appears to have stabilized in recent months but the June 2012 total was 3.7% less than a year earlier, Simonson noted. He said only two of the Census Bureau’s 13 public categories posted year-over-year increases.

“Private nonresidential and multifamily construction should continue to grow in the second half of 2012 and beyond,” Simonson predicted. “Single-family homebuilding also should top last year’s figures, although progress may not occur every month. As a result, total construction spending in 2012 will be positive for the year for the first time since 2007 even though public construction will remain in the doldrums.”

Association officials said construction growth will remain unbalanced, however, unless lawmakers enact more funding for essential water, wastewater and other infrastructure projects.

“Although Congress has kept highway spending from falling, other types of infrastructure, including our aging water systems, need attention,” said Stephen E. Sandherr, the association’s chief executive officer. “There is nothing to be gained from letting our infrastructure deteriorate further.”

Arizona Commercial Real Estate Development

Arizona Ranked No. 5 In Commercial Real Estate Development In 2011

Arizona was ranked No. 5 in 2011 in direct spending in all three phases of development across all categories of commercial real estate, according to a report issued last week by NAIOP.

Arizona’s development accounts for $4.2B in spending and 74,117 jobs supported, up from No. 14 last year. Arizona’s development contributed heavily to 2011 being the first year commercial real estate (office, industrial and retail buildings) has posted gains since the recession, according to NAIOP’s report, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011.

The NAIOP Research Foundation Study:
· Construction spending grew more than 12% from 2010 to 2011;
· 238.3 MSF built in 2011 was 2.5% more than in 2010;
· New projects provided capacity for 610,000 jobs;
· Commercial real estate development and construction contributed $262B to a GDP increase of 13% from 2010

Construction spending on commercial real estate totaled $92.3B, a more than 12% increase over 2010. This spending supported nearly 2 million jobs nationally.

“2011 was a transition year for the U.S. economy and the construction sector,” said the report’s author, economist Stephen S. Fuller, PhD, Dwight Schar Faculty Chair, University Professor and the Director of the Center for Regional Analysis at the George Mason University. “The U.S. economy shifted from a federal stimulus to private-sector driven growth pattern and construction spending grew accordingly.”

In addition to the advances made in 2011, forecasts for 2012 call for project construction spending to increase  and to accelerate further in 2013 and 2014, according to the report.

“For the first time we are seeing across the board increases in this sector,” said Thomas J. Bisacquino, NAIOP president and CEO. “We believe this is the most solid evidence yet of a strengthening recovery.”

The impact of the new spending was felt throughout the nation. The following states posted the highest amounts of direct spending in all three phases of development across all categories of commercial real estate (number in parenthesis refers to that state’s rank in 2010):

1. Texas (Previous rank: 2), $7.9B in spending, 150,102 jobs supported;
2. New York (1), $6.5B in spending, 83,762 jobs supported;
3. West Virginia (48), $5.9B in spending, 100,889 jobs supported;
4. California (3), $4.5B in spending, 70,817 jobs supported;
5. Arizona (14), $4.2B in spending, 74,117 jobs supported;
6. Utah (26), $3.6B in spending, 77,550 jobs supported;
7. Florida (4), $3.4B in spending, 64,970 jobs supported;
8. Illinois (10), $3.0B in spending, 50,136 jobs supported;
9. Massachusetts (21), $3.05B in spending, 41,382 jobs supported;
10. (tie) North Carolina (7), $3.05B in spending, 55,920 jobs supported.