Building costs are responding to the recession in nonresidential construction. In November 2009, the cost index for office building construction from the Bureau of Labor Statistics was down 4.2% from the beginning of the year, which in turn was down 2.8% from the level of November 2008. The decline in building costs reflects a steep drop in construction activity. Through the first 10 months of last year, total construction put-in-place for private office building work was down 27% from a year ago, according to the U.S. Dept. of Commerce. Source: Bureau of Labor Statistics
With statistics in for November, it looks pretty certain that construction markets will come in well below 2008’s level. The dollar value of construction starts through the first eleven months of this year was $381 billion, which was 28% below the same period a year ago, according to McGraw-Hill Construction (MHC), of which ENR is part. The annual declines were broad based, including 34% declines for both residential and non-residential buildings and a 12% drop for non-building construction. The non-residential building market was sapped by year-to-year declines of 39% for office buildings, 44% for stores, 63% for warehouses and 66%
Financier Carl Icahn is moving forward with plans to buy the troubled Fontaine- bleau project in Las Vegas by offering $156.2 million in cash and financing at a Jan. 27 bankruptcy court auction. The 737-ft-tall, 4,000-room Fontainebleau, which owes more than $1 billion to its lenders, needs another $1.5 billion to complete construction. There are 342 contractors and subcontractors that are owed an estimated $467 million for work at the stalled job. They have been pressing for the right to take over the project for what they are owed. Lenders, headed by Bank of America, meanwhile charge that the liens
As Congress headed for its year-end recess, the House delivered encouraging news to the construction industry, approving a jobs-producing, $154-billion economic-stimulus measure that includes about $47 billion for infrastructure work in several market sectors. The bill, approved on Dec. 16 by a slim 217-212 margin, would be a follow-on to the American Recovery and Reinvestment Act. But the Senate, enmeshed in protracted action on major health-care legislation, will not even take up a jobs bill until it returns in January from its break. Senate Assistant Majority Leader Richard Durbin (D-Ill.) and Democratic Policy Committee Chairman Byron Dorgan (N.D.) are gathering
The global economic recession undercut construction costs worldwide, according to London-based international project and cost-management firm Gardiner & Theobald Inc. in its eighteenth annual survey of international costs conducted exclusively for ENR. G&T’s survey covered 50 countries. Related Links: Forecast: Inflation Stalls As Recession Undercuts Nonresidential Building Markets Markets: Major Firms Are Pessimistic About A Fast Industry Recovery China: The New Driver Of International Costs Has Troubles Of Its Own Thailand: Construction Costs Bounce Up As The Recession Bottoms Out Canada: Cool Forecast Keeps Costs In The Deep Freeze Complete 4th Quarterly Cost Report with Data and Analysis In Europe,
Acautious optimism prevails as the year ends in Thailand, with materials indexes in flux. As in the U.S., local construction industry analysts believe the Thai recession has reached bottom and that small price increases now surfacing are a positive sign. + Image Source: FAITHFUL + GOULD Thailand Price-Change Movement Related Links: Forecast: Inflation Stalls As Recession Undercuts Nonresidential Building Markets Markets: Major Firms Are Pessimistic About A Fast Industry Recovery International: Global Recession Pushes Down Inflation China: The New Driver Of International Costs Has Troubles Of Its Own Canada: Cool Forecast Keeps Costs In The Deep Freeze Complete 4th Quarterly
In light of Canada’s cooling construction market, materials costs have stabilized after years of price spikes, but they are stabilizing at high levels. Source: Statistic Canada. 2002=100 Material Cost Indices - Canada Related Links: Forecast: Inflation Stalls As Recession Undercuts Nonresidential Building Markets Markets: Major Firms Are Pessimistic About A Fast Industry Recovery International: Global Recession Pushes Down Inflation China: The New Driver Of International Costs Has Troubles Of Its Own Thailand: Construction Costs Bounce Up As The Recession Bottoms Out Complete 4th Quarterly Cost Report with Data and Analysis Costs generally are remaining at historically high levels, says Scott
Signaling a move out of deflation, China’s consumer price index in November climbed 0.6% from a year earlier. This comes in tandem with the decision by China’s government, which had held prices for materials at superficially low levels, to allow them to rise and to begin introducing market competition in several key resource sectors. Related Links: Parity Index Adjusts for Exchange Rate Swings Forecast: Inflation Stalls As Recession Undercuts Nonresidential Building Markets Markets: Major Firms Are Pessimistic About A Fast Industry Recovery International: Global Recession Pushes Down Inflation Thailand: Construction Costs Bounce Up As The Recession Bottoms Out Canada: Cool
The industry downturn that started in early 2008 and blossomed during the financial collapse late last year has continued unabated throughout 2009 and shows little signs of changing. The optimistic attitude shared by many in the industry that an economic rebound is just around the corner slowly is giving way to the realization that the industry is in for a long recession. How Different Types Of Firms View The Overall Market Related Links: Forecast: Inflation Stalls As Recession Undercuts Nonresidential Building Markets International: Global Recession Pushes Down Inflation China: The New Driver Of International Costs Has Troubles Of Its Own
The depth of the current recession is best measured by declines in construction costs, and they have taken their biggest tumble since the Great Depression of the 1930s. McGraw-Hill Construction forecasts that the recession will tighten its grip on the nonresidential building markets next year despite the best stimulus efforts. It is forecasting the dollar value of nonresidential building starts to fall another 2% next year, following a 30% decline in 2009. Even with a predicted 32% increase in housing starts in 2010, the deteriorating nonresidential building market and double-digit unemployment will keep construction costs on a short leash in
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