Forecast Predicts 2009 Construction Starts at $463.1
Billion, Down 15 Percent
April 3, 2009
Still no good news for commercial construction, as McGraw-Hill's
2009 Construction Outlook Spring Update reported that commercial
building in 2009 is expected to drop 27 percent-steeper than the
17 percent slide reported last year. The tight lending environment
has made it difficult to obtain project financing, leading to more
projects being deferred or cancelled. While all commercial works
will register declines in 2009; the most severe retrenchment anticipated
is for hotel construction.
The recently released update from McGraw-Hill Construction provides
updated 2009 forecasts of construction starts for various project
"The construction industry is facing divergent forces in 2009,"
said Robert Murray, vice president of economic affairs, McGraw-Hill
Construction and author of the forecast. "The economy has weakened
substantially, and despite all the efforts last fall directed at
thawing frozen credit markets, there's yet to be any sign that lending
conditions for construction have improved. On the plus side, the
federal stimulus bill is now in place, which will provide quick
support to public works this year."
Major findings of the forecast include:
- New construction starts for 2009 are estimated at $463.1 billion,
down 15 percent, but cushioned by support provided by the recently
enacted American Recovery and Reinvestment Act of 2009;
- Public works will see the most immediate benefit from the stimulus
act, with construction starts climbing 10 percent. Without the
stimulus funding, McGraw Hill estimates that public works in 2009
would have fallen 10 percent, restrained by the deteriorating
fiscal health of state and local governments;
- Institutional building in 2009 will retreat 6 percent, as the
weak financial environment takes its toll on educational and healthcare
facilities. The stimulus funding will likely provide a lift to
military facilities and energy upgrades for federal buildings,
moderating this year's overall institutional decline.
- Residential building in 2009 will drop an additional 31 percent,
continuing the downward trend that's been underway since 2006.
Similar declines are expected for single-family housing (down
30 percent) and multifamily housing (down 31 percent). Steps taken
in early 2009 to address the foreclosure problem should help to
ease the rate of descent for housing as 2009 progresses.
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