Nonresidential Building to Remain Flat in 2007
By Megan Headley
The expectation is that "nonresidential building this year for
the United States will be flat," according to Robert Murray, vice
president of economic affairs for McGraw-Hill Construction. Murray
presented a 2007 Outlook for U.S. Construction Activity webcast
"It is still a pretty good year for nonresidential building," Murray
said. "When you get to 2008 this might change a bit."
Murray predicted "modest percentage declines" for nonresidential
construction into 2009, while hoping that a slight increase in single-family
housing construction will offset a decline in nonresidential construction,
balancing overall construction activity.
The webcast also addressed the increasing costs of materials.
"The cost of materials has been a major issue from 2004 to the
present," Murray said.
Among the rising costs, Murray noted that heightened global demand
of steel and iron, particularly in China, has contributed to continuing
increases in the prices of those products.
"It would seem that iron and steel is once again becoming an issue
the building industry has to deal with," Murray said.
However, the cost of glass products, according to Murray, will
With respect to individual areas of nonresidential construction,
Murray predicted that the construction of income properties-including
commercial buildings and multifamily housing-is expected to see
a 5-percent decline in 2007, but it's a decline that follows big
increases in the last two years.
Murray said that hotel construction remained the star of the show
in 2006, and remains fairly strong this year as well. However, a
4-percent decrease in construction in 2007 might indicate "a pullback
in lodging-related construction in 2008 and 2009," he said.
He noted that casino hotel growth stands out-with the top three
projects in terms of square feet located in Las Vegas-as well as
growth in convention center hotels and condominium hotels.
"Broadening of the construction activity across the lodging spectrum
which will keep the overall activity pretty high," Murray said.
Murray also expects a "gradual upturn" in the construction of office
buildings in 2007.
"The expectation is for another year of expansion getting up to
210 million square feet," he said. That marks a 4-percent increase
Murray also noted that 2006 saw an all-time high in terms of healthcare
building construction-110 million square feet. "We do see a mild
pullback taking place in 2007," he said.He predicted a 2-percent
decrease to 107 million square feet.
One big trend Murray spotlighted during the webcast was toward
green building-which, according to a recent survey conducted by
McGraw Hill, is hardly a trend anymore. The survey of 190 corporations
found "growing acceptance and a growing tendency to engage in green
activities and green building strategies." Murray predicts a market
shift in the next three years toward more green projects.
"By 2009, 80 percent of corporate America is expected to be engaged
in green at least 15 percent of the time," Murray said.
Twenty percent of corporations are expected to be engaged in green
practices 60 percent of the time. Forty-three percent of the survey
respondents said that green activities and green building are part
of their firms' growth strategies.
With relation to glass, Murray said that the Energy Policy Act
of 2005 is one of a few major legislative actions that has spurred
on construction work. The act offers tax credits for, among other
things, energy-efficient windows and doors and film.
Murray also noted that a federal executive order in January set
energy and environmental goals for federal agencies, including an
energy reduction of 3 percent per year through 2015 or 30 percent
"There's been a lot more emphasis placed on green building practices,"
Megan Headley is assistant editor for USGNN.com/USGlass