Commercial construction spending in the second quarter of 2017 increased 13% from the same period last year and office construction rose 11%, according to the latest Marcum Commercial Construction Index. However, these bright spots contrast with a decline of 3.1% in overall nonresidential construction spending in June year-over-year and a monthly drop of 2.0% from May 2017. The index is produced by the Construction Services Group of Marcum LLP, a national accounting and advisory firm.
Anirban Basu, the report’s author, attributes the relative strength of the commercial and office subsectors to the ecommerce boom. He also notes that June spending in communication construction increased 4.9% year-over-year and 2.8% from May 2017. The only other subsector to record a gain was health care, with a 2.8% annualized improvement, although monthly results in the sector declined 0.2% in June.
“With interest rates remaining near rock-bottom levels, investors have been chased up the risk spectrum, including into commercial real estate. That has helped to raise property values and prompt new construction. These dynamics have also helped lift industry backlog and supported reasonably solid profit margins,” Mr. Basu wrote.
Spending in all 12 of the remaining nonresidential construction subsectors retreated on both an annualized and monthly basis. The largest declines came in public sector spending, including conservation and development (-20.6% and -7.3%, respectively), sewage and waste disposal (-16.8% and -2.4%), and water supply (-16.4% and -3.7%).
“The infrastructure boom we have been waiting for has not arrived as of yet. Business attitudes and the business environment and confidence remain high for the moment. Backlogs in the private sector are healthy. Investment is robust. It’s my hope that we can turn some of this momentum towards infrastructure, sooner rather than later,” said Joseph Natarelli, national leader of Marcum’s Construction Services Group and an office managing partner in New Haven, Connecticut.
Current economic trends in the construction industry will be discussed in depth at the upcoming annual Marcum Construction Summits in Ft. Lauderdale, Fla., on September 7; New Haven, Conn., on September 27; and New York City on October 23.
For the complete Marcum Commercial Construction Index, visit www.marcumllp.com.
Related Stories
Market Data | Nov 27, 2023
Number of employees returning to the office varies significantly by city
While the return-to-the-office trend is felt across the country, the percentage of employees moving back to their offices varies significantly according to geography, according to Eptura’s Q3 Workplace Index.
Market Data | Nov 14, 2023
The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of September 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.4 months in October from 9.0 months in September, according to an ABC member survey conducted from Oct. 19 to Nov. 2. The reading is down 0.4 months from October 2022. Backlog now stands at its lowest level since the first quarter of 2022.
Multifamily Housing | Nov 9, 2023
Multifamily project completions forecast to slow starting 2026
Yardi Matrix has released its Q4 2023 Multifamily Supply Forecast, emphasizing a short-term spike and plateau of new construction.
Contractors | Nov 1, 2023
Nonresidential construction spending increases for the 16th straight month, in September 2023
National nonresidential construction spending increased 0.3% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.1 trillion.
Market Data | Oct 23, 2023
New data finds that the majority of renters are cost-burdened
The most recent data derived from the 2022 Census American Community Survey reveals that the proportion of American renters facing housing cost burdens has reached its highest point since 2012, undoing the progress made in the ten years leading up to the pandemic.
Contractors | Oct 19, 2023
Crane Index indicates slowing private-sector construction
Private-sector construction in major North American cities is slowing, according to the latest RLB Crane Index. The number of tower cranes in use declined 10% since the first quarter of 2023. The index, compiled by consulting firm Rider Levett Bucknall (RLB), found that only two of 14 cities—Boston and Toronto—saw increased crane counts.
Market Data | Oct 2, 2023
Nonresidential construction spending rises 0.4% in August 2023, led by manufacturing and public works sectors
National nonresidential construction spending increased 0.4% in August, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.09 trillion.
Giants 400 | Sep 28, 2023
Top 100 University Building Construction Firms for 2023
Turner Construction, Whiting-Turner Contracting Co., STO Building Group, Suffolk Construction, and Skanska USA top BD+C's ranking of the nation's largest university sector contractors and construction management firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking includes revenue for all university/college-related buildings except student residence halls, sports/recreation facilities, laboratories, S+T-related buildings, parking facilities, and performing arts centers (revenue for those buildings are reported in their respective Giants 400 ranking).
Construction Costs | Sep 28, 2023
U.S. construction market moves toward building material price stabilization
The newly released Quarterly Construction Cost Insights Report for Q3 2023 from Gordian reveals material costs remain high compared to prior years, but there is a move towards price stabilization for building and construction materials after years of significant fluctuations. In this report, top industry experts from Gordian, as well as from Gilbane, McCarthy Building Companies, and DPR Construction weigh in on the overall trends seen for construction material costs, and offer innovative solutions to navigate this terrain.
Data Centers | Sep 21, 2023
North American data center construction rises 25% to record high in first half of 2023, driven by growth of artificial intelligence
CBRE’s latest North American Data Center Trends Report found there is 2,287.6 megawatts (MW) of data center supply currently under construction in primary markets, reaching a new all-time high with more than 70% already preleased.
