December 31, 2012
Joseph Natarelli, National Construction Industry Leader & Partner-In-Charge of the New Haven Office, Article "Vacancy Rates a Drag on Construction Sector" Featured in Hartford Business Journal's Metro Hartford Trends Report
The day-to-day economics of the construction business can be observed on development sites in towns and cities across the state and the country. While new commercial development in Hartford continues to be stymied by record-high vacancy rates in current inventory, based on what I see in the field and what people in the industry are telling me, the industry as a whole is starting to show signs of recovery — albeit painfully slowly.
The U.S. economy just completed 13 consecutive quarters of growth. Total construction spending reflected this trend, with $851.6 billion spent in the third quarter this year. This represents a respectable 7.8 percent increase over the third quarter a year ago. But residential construction was the clear leader in this scenario, recording a year-to-year gain of 19.2 percent, while nonresidential construction registered a significantly more modest 2.6 percent gain year-to-year. It’s a start, but there’s obviously still a long way to go.
The outlook for commercial construction — a key barometer of economic health – is tempered by the decline in nonresidential fixed investment in structures that we saw during the third quarter as compared to the second quarter. This category encompasses investments surrounding construction, such as the purchase of real estate. Activity in this category actually declined quarter-to-quarter by more than 4 percent.