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 | May 7, 2018
Construction employers add 17,000 jobs in April and 257,000 for the year
Unemployment rate for construction increases slightly compared to year earlier as higher pay levels appears to be attracting people with recent construction experience back into the workforce.
Market Data | May 2, 2018
Construction employment increases in 245 metro areas between March 2017 & 2018, as trade fights & infrastructure funding shortfalls loom
Houston-The Woodlands-Sugar Land, Texas and Weirton-Steubenville, W.Va.-Ohio experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines.
Market Data | May 2, 2018
Nonresidential Construction down in March, private sector falters, public sector unchanged
February’s spending estimate was revised roughly $10 billion higher.
Market Data | Apr 30, 2018
Outlook mixed for renewable energy installations in Middle East and Africa region
Several major MEA countries are actively supporting the growth of renewable energy.
Market Data | Apr 12, 2018
Construction costs climb in March as wide range of input costs jump
Association officials urge Trump administration, congress to fund infrastructure adequately as better way to stimulate demand than tariffs that impose steep costs on contractors and project owners.
Market Data | Apr 9, 2018
Construction employers add 228,000 jobs over the year despite dip in March
Average hourly earnings increase to $29.43 in construction, topping private sector by nearly 10%; Association officials urge updating and better funding programs to train workers for construction jobs.
Market Data | Apr 4, 2018
Construction employment increases in 257 metro areas between February 2017 & 2018 as construction firms continue to expand amid strong demand
Riverside-San Bernardino-Ontario, Calif. and Merced, Calif. experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines in construction employment.
Market Data | Apr 2, 2018
Construction spending in February inches up from January
Association officials urge federal, state and local officials to work quickly to put recently enacted funding increases to work to improve aging and over-burdened infrastructure, offset public-sector spending drops.
Market Data | Mar 29, 2018
AIA and the University of Minnesota partner to develop Guides for Equitable Practice
The Guides for Equitable Practice will be developed and implemented in three phase.
Market Data | Mar 22, 2018
Architecture billings continue to hold positive in 2018
Billings particularly strong at firms in the West and Midwest regions.
