Sunday, July 15, 2007

Building Boom - continued

As I mentioned last week, it seems most economists are baffled by the strength of employment in light of the temporary residential construction slowdown. What they don't realize is that many of these firms are general and specialy contractors that can shift their focus to commercial construction which has been booming. In this week's Businesweee Outlook James Mehrig backs up this hypothesis with data.

Builders Are Busy With Offices And Factories

Outside of housing, there's a construction boom. The protracted recession in residential building is getting all the attention, but nonresidential building shows scant signs of letting up. That's softening the blow from housing for both the industry and the overall economy.

In the second quarter, U.S. office-vacancy rates fell to 12.6%, down from 13.7% a year ago, according to commercial real estate services company CB Richard Ellis Group (CBG ). The decline came despite a 21.5% yearly increase in the amount of office space constructed during the second quarter.......

......The outlook remains upbeat. "There is still a large pool of buyers" for office space, says Ward Caswell, U.S. director of research at CB Richard Ellis. In May, new nonresidential construction starts increased at an annualized rate of 4.4% from April, while nonbuilding starts, such as constructing new highways and bridges, spiked by 43%, according to McGraw-Hill Construction.

JULY 23, 2007 - Business Outlook, James Mehring - BusinessWeek

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