Progress Hard to Find

With statistics in for the first three quarters of the year, the construction industry can presumably conclude that 2010 did not mark a turnaround in its fortunes.

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According to McGraw-Hill Construction, Bedford, Mass., September figures in particular brought bad news, as the infrastructure segment retreated after showing a surge of growth in the summer months.

New construction starts in September retreated 7 percent, according to McGraw-Hill, with both non-residential building and housing showing modest improvement in the month, but not enough to make up for the 27 percent drop in new infrastructure activity.

Year-to-date, total new construction projects have been valued at $314.6 billion, down 3 percent from the first nine months of 2009. “The monthly pattern shows that construction starts have essentially stabilized at a low level, but have not yet reached the point where renewed expansion is taking hold,” says Robert A. Murray, McGraw-Hill Construction vice president of economic affairs.

“For various reasons, a sustained upturn for overall construction activity remains several quarters away,” predicts Murray. “The lift that had been provided to the public works sector from the stimulus funding is now subsiding. Vacancy rates for commercial properties remain high and will be slow to recede given the weak employment picture. The tough fiscal climate for states and localities is making it more difficult for institutional projects to go ahead.”

Infrastructure, or non-building construction, dropped 27 percent after large gains of 25 percent in July and 23 percent in August. Highway construction in September, though, was unchanged from August, while bridge construction edged up 2 percent with the help of a $182 million bridge rehabilitation project in Brooklyn, N.Y.

Nonresidential building rose 8 percent in September, with the office category rising thanks to a $290 million project in Melville, N.Y., a $146 million office building in Gaithersburg Md., and $104 million for the office portion of a judicial center in Denver. Despite the September gains, all three commercial categories year-to-date continued to lag behind 2009’s pace, with stores down 10 percent, offices down 25 percent and hotels down 38 percent.

Across all sectors by region, construction during the first nine months of 2010 has revealed an increase for only one region—the Northeast, up 7 percent. Total construction in the Midwest has remained even with one year ago, while total construction declines have been reported for the South Central (down 3 percent); the West (down 6 percent); and the South Atlantic (down 10 percent).