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
New website highlights government tax incentives for large commercial buildings
Energy Retrofit Group (ERG), the subsidiary of 40-year-old, award-winning Adache Group Architects, Inc., has announced the creation of their new energy conservation web site: www.energy-rg.com.
| Aug 11, 2010
AGC: Construction unemployment reaches 19.2%
Unemployment in the construction sector climbed to a “horrendous” 19.2 percent (not-seasonally adjusted) as an additional 59,000 construction workers lost their jobs in May according to new federal data, said construction economist Ken Simonson today.
| Aug 11, 2010
Gensler, HOK, HDR among the nation's leading reconstruction design firms, according to BD+C's Giants 300 report
A ranking of the Top 100 Reconstruction 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
Gensler, Arup, HOK among the largest office sector design firms
A ranking of the Top 100 Office 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
Callison strengthens retail design presence with RYA acquisition
Callison LLC on June 1 acquired RYA Design Consultancy, a Dallas-based retail architecture and design firm with offices in New York City. The new “Callison RYA Studio” will merge staff and clients into Callison ’s existing retail practice at their Dallas and New York offices.
| Aug 11, 2010
RSMeans/RCD forecast 14% drop in hospital construction for 2009
RSMeans forecasts a 14% drop in hospital construction in 2009 compared to 2008, with $17.1 billion in registered hospital projects as of June 30, 2009. The Reed Construction Data unit finds renovation of healthcare facilities increasing, from 36% of projects in 2008, to 40% of projects in the pipeline in the first six months of 2009.
| Aug 11, 2010
Prism-shaped design unveiled for five-star hotel in Saudi Arabia
Goettsch Partners has been commissioned by Saudi Oger Ltd. to design a new five-star, 214-key business hotel in the King Abdullah Financial District in Riyadh, Saudi Arabia. As a design-build assignment, Saudi Oger is serving as the contractor, selected by developer Rayadah Investment Company. The project is sited on Parcel 1.08, one of the first 10 parcels currently under development in the massive new master-planned district.
| Aug 11, 2010
Data center construction costs are down, according to a study by Environmental Systems Design
The current economic crisis has an up-side for owners of mission-critical facilities: On average, it costs less today to construct a new data center than it did in late 2007, according to a study by Environmental Systems Design (ESD). ESD found that the prices of feeder and cable have dropped by more than half, major data center equipment by 12%, labor and materials by 19.6%, and shipping and handling by 15% from the fourth quarter of 2007 to July 15, 2009.
