S&P Sees Weakening Commercial Construction

All categories of U.S. commercial construction, as well as multifamily housing, are likely to weaken in the months ahead, according to an article published by Standard & Poor's. The article reports that new commercial construction "dropped sharply" in the fourth quarter and projects that it should weaken further, but that "the carry-through from buildings that reached groundbreaking in 2007 should keep construction spending above that of 2007." On an inflation-adjusted basis, S&P is forecasting a 16% drop in commercial starts this year and a 9% decline in 2009. The article, "U.S. Commercial Construction: After the Wave Comes the Trough," says that apartments are in the weakest situation and offices the strongest. "On the positive side, the degree of overbuilding in commercial properties is far less than it was in the late 1980s, where downtown office vacancy rates were 20% even before the start of the recession," S&P said. "At the end of 2007, vacancies were averaging about half that level." S&P can be found online at http://www.standardandpoors.com.