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Commercial building shows signs of slowing

Commercial starts in the United States grew in 2007 by 11.2 percent, but the year ended with curtailment of building activity in the last three months, according to Reed Construction Data.

Retail and office construction both experienced strong gains in December, increasing 37 percent and 29 percent, respectively, over the previous month. Industrial building starts grew by 10 percent, mostly due to new hospitals. Financing holdups during October and November may have delayed starts and boosted December’s numbers, Reed analysts said.

Highway work fell 26 percent during December, and heavy engineering construction declined 23 percent.

The final quarter of 2007 recorded a 17.6 percent drop in construction activity compared to the previous three months. This decline was attributed to more than the usual winter slowdown.

Looking forward, Reed Construction predicts that starts of commercial buildings in 2008 will be restrained by higher financing costs, tighter credit standards and a slowdown in the economy.


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