U.S. Office, Retail Building to Drop Through 2009, Study Says
Construction of U.S. office and retail buildings is poised to fall for the rest of this year and through 2009 on lower demand from tenants, stricter lending standards and rising building costs, the American Institute of Architects said.
Office-building construction likely will drop 3.7 percent this year and 12.3 percent in 2009, the Washington-based group said today in its semi-annual Consensus Construction Forecast. Construction of shopping centers and other retail buildings is forecast to fall 8.3 percent this year and 9.9 percent next year.
“The more pessimistic forecasts this round stem from the lack of growth in the overall economy, the ripple effect from the faltering housing market and the anxiety in the credit markets leading to a restriction in lending for all types of construction projects,'' Kermit Baker, the institute's chief economist, said in a statement.
The slowing U.S. economy is cutting demand for space from retail and office tenants, and the cost of construction materials has increased 37 percent since 2004, more than double the rise in the cost of consumer products and services, the American Institute of Architects said no teletrack payday loans. Petroleum-based materials and commodities such as steel and concrete “have experienced sharp price increases in recent years,'' Baker said.
Hotel construction probably will increase 6.6 percent this year before dropping 9.9 percent in 2009, the institute said. Construction of warehouses and other industrial properties is forecast to rise 4.6 percent this year and decline 5.5 percent next year.
Health Care, Education
Construction of the two largest institutional categories, health-care facilities and educational buildings, likely will rise 0.2 percent and 2.7 percent respectively, this year. Health-care construction likely will rise 1.1 percent in 2009, and construction of educational facilities will probably fall 1.1 percent, the institute said.
The institute twice a year issues its forecast using projections from Global Insight Inc., the Portland Cement Association and management consulting firm FMI Corp. The institute has been producing the forecast for 10 years.
Filed under: online by Wolf