Commercial Construction Outlook Grim for 2009

Miami, FL, Jan. 30, 2009--Don’t expect construction miracles in 2009.

That’s the combined outlook from discouraging year-end data and recent economic surveys that analyze potential future trends, according to a story in the South Florida Business Journal.

Beige Book reports from the 12 Federal Reserve districts found commercial real estate markets weakening, with declines in job backlogs and falling activity.

For example, the Atlanta district, which covers activity in Florida, reported an overall decline in business activity, with commercial construction projects being cancelled or postponed.

Rudy Schupp, president and CEO of 1st United Bank in Boca Raton, is a board member on the Atlanta Federal Reserve Board.

“From our bank’s perspective, we are seeing no demand for construction loans for new projects,” he said.

Schupp estimates his loan pipeline, primarily made up of loans for the purchase of existing facilities, equipment and revolving credit lines, is running from one-quarter to one-third of what the commercial loan volume was in 2007.

The latest study from the National Association for Business Economics characterized the economy as having the worst business conditions since the Washington, D.C.-based nonprofit began its quarterly economic surveys in 1982.

For the second consecutive quarter, the association said capital spending plans for structures over the next 12 months remain negative – with only 5 percent of the 105 January survey respondents expecting positive growth.

McGraw Hill Construction, in its Outlook 09, warns that the list of non-residential projects derailed or abandoned because of the credit crisis will grow longer.

Ken Simonson, chief economist with the Associated General Contractors of America, expects a $149 billion stimulus package to be funded by the end of September for infrastructure replacement and upgrades in public buildings.

Print the Article