Reed Construction Data announced that the year-to-date value of construction starts through April 2007, excluding residential contracts, totaled $97.355 billion, 21.7% higher than in 2006.
Preliminary estimates suggest that this non-residential gain
will be more than offset by a decline in the value of residential starts. The
23% year-to-date increase in non-residential building starts, compared to the
same period last year, will keep job-site construction spending rising through
2008 on top of the 16.4% gain reported by the U.S. Census Bureau over the last
The value of construction starts is summarized from Reed
Construction Data’s database of all active construction projects in the U.S.
Unreported project values were estimated using RSMeans construction cost
models. The year-long slowdown in Gross Domestic Product (GDP) growth has not
yet restrained the demand for non-residential space and facilities because of
the long planning and financing cycle for these projects.
However, this negative impact on demand is expected to be a
restraint at the pre-bid phase this summer, the starts or bid phase by year-end
and on job-site spending by late next year. Commercial starts in April were the
second highest ever reported, below only January 2007. Institutional starts in
April were the third highest ever reported.
Hotels and offices continue to be the fastest-growing
commercial sectors. Developers anticipate high rates of returns on these
projects, based on rapid increases in rental rates and enough additional demand
to absorb the new supply expected over the next year, without increasing
Education has replaced health care as the fastest expanding
institutional sector, although the small nursing-home market is still expanding
rapidly. School and college construction is being funded from the near record
level of state and local government budget reserves.
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