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Commercial Real Estate

Real Estate Construction Spending Dips, Commercial Nosedives

Real estate construction spending

house-constructionIn predictable fashion, construction spending continued to decline in November of 2009, reports the US Commerce Department. Total spending declined and some sectors were harder hit than others while residential real estate construction spending fell just under 20% from November 2008 (a less grim number than the 23% year over year drop experienced in October) while commercial construction spending nosedived 40%!

Commercial construction spending only dropped 1% in November from October but overall, it nosedived a heartbreaking 40.5% from November 2008. Do you think the commercial sector was overheated in the first place, making this a predictable drop or is it because CRE is more dependent on the global market than the residential sector?

The statistical data:

Below are the real estate sectors we most closely monitor and the changes they are going through regarding construction spending with the universal verdict being that the numbers are dropping gradually this fall yet in comparison to the same time last year, the dip is pretty severe.

construction spending

billions in spending

We’ll continue to see these numbers slide gradually but the worst may not yet be here for the commercial real estate sector. It will be interesting to see how the general contracting firms react during this down time.

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

12 Comments

12 Comments

  1. Sal Antsipenka

    January 6, 2010 at 1:19 am

    I have been talking to Naples developers about their marketing strategies and found out an interesting trend – there is a definite room for building single family homes withi $300K range. They will definitely sell. By the way we are running out of condos built after 2000 and older condos don’t sell that well unless it’s an absolute “steal”. So I think we will see some building activity in the nearest future in Naples Florida.

  2. 4BostonOfficeSpace

    January 7, 2010 at 7:54 pm

    Due to the capital markets, commercial projects all over the country have been suspended in progress, temporarily pulled from the cue, or shelved indefinitely. From consumers, to office tenants, to commercial building owners, it’s an environment of making due the best one can while maybe putting on a fresh coat of paint.
    Vacancy is plaguing all property classes.
    The bottom line: No new jobs = No new demand = No new construction.
    Put the hostage Stimulus dollars to work in the economy’s job engine, the Small – Medium Business sector, and we might have a chance.

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