"Total construction continues to move at a healthy pace, and it's now virtually certain that full year growth for 2004 will exceed the 5% gain in 2003," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "Single family housing is still exceptionally strong, and the broad trend for commercial building this year is generally upward, even with the reduced amount of construction starts in August. At the same time, tight fiscal conditions over the past several years continue to have a restraining influence on the institutional structure types and public works construction."
Nonresidential building in August fell 7% to $157.7 billion (annual rate). Weaker activity was registered by the major commercial categories - stores, down 4%; warehouses, down 7%; offices, down 14%; and hotels, down 32%. In the case of offices, the comparison was against a heightened July, which included $800 million related to the start of the Freedom Tower in lower Manhattan. If this project is excluded from the July statistics, new office starts in August would be up 37%. Several large office projects reached the groundbreaking stage in August, including the $400 million headquarters for the New York Times in midtown Manhattan and an $80 million federal office building in Chicago. Through the first eight months of 2004, the major commercial categories showed these dollar volume gains relative to 2003 - stores and warehouses, each up 2%; hotels, up 8%; and offices, up 9%.
The institutional structure types had a mixed August. Reduced contracting was registered by schools, down 4%; amusement-related projects, down 11%; transportation terminals, down 13%; and public buildings (courthouses and detention facilities) down 17%. On the plus side, church construction increased 12%, while health care facilities surged 46%, boosted by the start of large hospital projects in Colorado ($130 million), Utah ($123 million), Florida ($78 million), Virginia ($65 million), and California ($60 million). Murray noted, "After experiencing a brief pause during 2003, health care facilities construction appears to be regaining an upward trend this year. Much of the push is coming from large hospital projects, while contracting for clinics and nursing homes has stayed flat." The August nonresidential statistics also included a 49% drop for manufacturing-related buildings, following the sharp increase for this structure type in July.
The 10% gain for total construction during the January-August period of 2004 reflected this pattern by sector - residential building, up 18%; nonresidential building, up 2%; and nonbuilding construction, up 1%. By region, the year-to-date performance for total construction was the following - the South Atlantic, up 15%; the West, up 12%; the Northeast, up 9%; the South Central, up 8%; and the Midwest, up 6%.