The recession reduced retail construction spending early and deeply, but now most of the decline should be behind us. Construction spending is down 48% over the last two-and-a-half years, and the value of retail construction starts reported by Reed Construction Data fell 41% in 2009 vs. 2008. Construction spending is expected to drop 5-6% more by late 2010; the decline will be close to 10% after adjusting for project cost inflation. Retail construction starts are expected to be unchanged early in 2010 and then begin rising quickly later in the year.
The reasons for the steep construction declines differ for developers, large retail chains, and smaller retailers. Shopping center and mall developers cut construction spending before the September 2008 credit freeze because they saw declining returns for commercial real estate investments. With recovery, prospective returns will be rising again by the end of the summer.
Construction spending in 2009 fell 50% for shopping centers and 40% for shopping malls. Retail chains, which slowed spending in late 2007 and cut more deeply when the credit freeze began, have maintained steady spending in recent months. Building supply centers cut spending 57% in 2009. Smaller retailers continued to expand construction spending until just a few months before the credit freeze, then sharply slashed spending when they lost access to credit and suffered a drop in their ability to offer lenders collateral and equity participation. Construction spending for standalone stores fell 70% in 2009. Spending declined about 45% for auto dealers, auto parts/service facilities, and restaurants and bars. —Jim Haughey, BD+C economist
Related Stories
| Aug 11, 2010
29 Great Solutions for the AEC Industry
AEC firms are hotbeds of invention and innovation to meet client needs in today's highly competitive environment. The editors of Building Design+Construction are pleased to present 29 "Great Solutions" to some of the most complex problems and issues facing Building Teams today. Our solutions cover eight key areas: Design, BIM + IT, Collaboration, Healthcare, Products, Technology, Business Management, and Green Building.
| Aug 11, 2010
Arup, SOM top BD+C's ranking of the country's largest mixed-use design firms
A ranking of the Top 75 Mixed-Use Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
International Living Building Institute established to advance 'living buildings'
The idea of a Living Building, a high-performance building that produces its own power and cleans and reuses all of its water, is gaining momentum around the world. In an effort to oversee the global development of Living Buildings, the International Living Building Institute (ILBI) has been established.
| Aug 11, 2010
10% of world's skyscraper construction on hold
Emporis, the largest provider of global building data worldwide, reported that 8.7% of all skyscrapers listed as "under construction" in its database had been put on hold. Most of these projects have been halted in the second half of 2008. According to Emporis statistics, the United States had been hit the worst: at the beginning of 2008, "Met 3" in Miami was the only U.S. skyscraper listed as being "on hold". In the second half of the year, 19 projects followed suit.
| Aug 11, 2010
Structure Tone, Turner among the nation's busiest reconstruction contractors, according to BD+C's Giants 300 report
A ranking of the Top 75 Reconstruction Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
IFMA workplace study: Average space per employee up 40 sf since 2007, likely due to corporate layoffs
The International Facility Management Association has released “Operations and Maintenance Benchmarks, Research Report #32,” a study outlining the facility trends affecting workplaces throughout North America. Among the new report’s findings are that the average space per person has risen nearly 40 square feet since 2007, likely due to recent corporate layoffs.
| Aug 11, 2010
ASHRAE research targets tying together BIM and energy efficiency
Ensuring that a common language of “energy efficiency” is spoken by both building information modeling software used by architects and energy analysis and simulation software used by engineers is the goal of new research funded by ASHRAE.