 |
Healthcare construction spending grew at a compound rate of more than 10% for seven years through mid-2008, but has stalled since then. The stall, however, still represents better growth than almost any other construction market during the recession, which deepened as a result of the fall 2008 credit freeze.
During the stall, hospital construction spending increased 9% from the period before the credit freeze, while spending for nursing homes and other residential care facilities dropped 20% and spending for specialized medical office buildings fell 17%. Hospital construction spending is projected to remain steady through 2010, rising only as a result of higher project costs.
Hospital managers are enjoying a steadily rising revenue stream from patient care, but offsetting that are concerns about possible cuts in fees from states for “free care” and cuts in Medicaid and Medicare. As a precaution, some projects have been trimmed back or deferred.
The recent slowing trend for medical offices and residential care buildings parallels trends in other developed financed sectors, although the slowdown began later and so far has been less severe. Some developers lost credit access because of weakened income and balance sheets. Others lost credit access because lenders are concerned about cash flow coming from new capacity in a depressed economy. Bank examiners have also been steering regional and local lenders away from nonresidential mortgages. As a result, those two small commercial healthcare sectors will continue to decline, along with other commercial properties, through the winter. Following that, they will decline further because spending for other commercial properties will have begun to expand and projects in the pipeline will have fallen substantially.
Look for healthcare construction spending to return to a 10% annual growth pace in 2011, reflective of the usual cyclical surge after a recession. The rebound for hospital construction spending results from delayed stimulus plan funding and the resumption of work that was put on hold while healthcare was debated in Washington. —Jim Haughey, BD+C economist
Related Stories
| Aug 11, 2010
UC Merced researchers receive $568,000 grant to develop solar sensing, tracking system
Alberto Cerpa, an engineering professor at the University of California Merced, has received a $568,202 grant from the National Science Foundation to develop a system that will measure and track the amount of sunlight that reaches ground level where photovoltaic panels and solar concentrators used in solar energy systems collect light and heat to turn into electricity.
| Aug 11, 2010
Mark McCracken named chair-elect of USGBC Board of Directors
Mark MacCracken, CEO of CALMAC, Inc., a producer of cold storage energy solutions, has been selected as Chair-elect of the U.S. Green Building Council (USGBC) Board of Directors for the 2010 calendar year. The USGBC Board of Directors is responsible for articulating and upholding the vision, values and mission of USGBC. In 2009, MacCracken was elected to serve a second 3-year term as Director in the Energy Services Seat.
| Aug 11, 2010
Only four out of 337 cities added construction jobs in 2009
Construction employment grew in only four out of 337 metropolitan areas in 2009 as spending on construction projects dropped by $100 billion in December to a six-year low of $903 billion, according to a new analysis by the Associated General Contractors of America of federal figures released recently.
| Aug 11, 2010
Zero Energy Buildings + Homes' Call for Editorial Contributions & Contributors
BD+C will publish its 8th Annual White Paper on Green Buildings, "Zero Energy Buildings + Homes," in November-and you can contribute to it. We're looking for highly qualified experts (or teams of experts) to write individual chapters (about 2,000-3,000 words). We've started the outline here, but we'd like your suggestions about additional chapters. What did we miss? Help us shape this important report.
| Aug 11, 2010
Blue ribbon panel unveils recommendations for NYC's green building codes
In response to City's request, the task force unveils more than 100 recommendations for greening NYC buildings, in most sophisticated analysis ever conducted by a municipality
| Aug 11, 2010
ULI: 'Old Normal' will not be a part of the housing recovery
As the U.S. economy recovers, emerging trends in demographics and consumer behavior will become major drivers of new housing opportunities, resulting in a residential market vastly different from the one that existed prior to the recession, according to Housing in America: The Next Decade, a new research paper authored by John K. McIlwain, senior resident fellow, Urban Land Institute/J. Ronald Terwilliger Chair for Housing.
| Aug 11, 2010
Billings increase less than a point in December, still in negative territory
The American Institute of Architects reported the December Architecture Billings Index rating was 43.4, up slightly from 42.8 in November. The score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). AIA Chief Economist Kermit Baker said the inability to get financing is still the main roadblock to recovery.
| Aug 11, 2010
FMI: 2009 was the bottom for residential, non-residential construction still in freefall
While 2009 was likely the bottom in terms of percentage decline, 2010 will be the bottom in terms of dollar volume for non-residential construction, according to market analysts at consulting firm FMI. Residential construction is expected to begin recovering in 2010. The economy may show some signs of improving, but it is just the beginning of the downfall for nonresidential construction.
| Aug 11, 2010
SFI releases new sustainable forestry standard
The Sustainable Forestry Initiative has released a new standard. SFI 2010-2014 addresses climate change and bioenergy; strengthen unique SFI fiber sourcing requirements, which broaden the practice of sustainable forestry; complements SFI activities aimed at avoiding controversial or illegal offshore fiber sources, and embraces Lacey Act amendments to prevent illegal logging; and expands requirements for logger training and support for trained loggers and certified logger programs.
| Aug 11, 2010
Another steep decline in nonresidential construction activity projected for 2010
Despite signs that the overall U.S. economy is beginning to improve, nonresidential construction spending is expected to decrease by 13.4% in 2010 with a marginal increase of 1.8% in 2011 in inflation adjusted terms, according the American Institute of Architects' Consensus Construction Forecast. Commercial and industrial projects will continue to see the most significant decrease in activity. Thanks, in part, to federal stimulus spending, institutional building categories will fare better over the new year. BD+C, January 6
