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Non-Residential Sector on an Up Trend in 2005
Total construction climbed 10% to $651.4 billion last year, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. This was close to the 11% increase reported for 2004, and well above 2%-5% annual growth in 2001-2003.
The company’s Dodge Index declined slightly at the end of the year, dropping from 201 in November to 200 in December, but was still up from the overall 2005 average of 196.
"Higher materials prices appeared to dampen the non-residential sector at the outset of 2005, as developers deferred and redesigned projects to deal with rising costs," said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "At the same time, market fundamentals such as occupancies and rents improved, and this helped non-residential building to regain an upward trend as the year progressed.”
Non-residential building increased 5% in 2005 to $171.9 billion, with much of the growth coming from institutional structures. School construction, which had been losing momentum during the three previous years, rose 8%.
"There's still a substantial need for more classroom space, both new and renovated, and school construction is not being dampened by tight fiscal conditions to the same extent as what occurred a few years ago," Murray said.
Construction of healthcare facilities jumped 18% last year to a record volume. Ground was broken on 42 hospital projects valued at $75 million or more, compared to 22 in 2004.
Spending on public building construction improved 9% last year following a weak 2004, while transportation terminals were up 12%. There were major airline terminal projects started last year in Indianapolis ($270 million), New York ($200 million) and San Jose, Calif. ($125 million).
Among institutional structures, two registered declines: amusement-related projects, down 3%; and churches, down 11%.
Commercial construction in 2005 was mixed. Supported by the expansionary efforts of major retailers, store construction advanced 4%, the third consecutive yearly gain. Hotel construction jumped 22%, helped by rising occupancies and room rates.
Warehouses were down 4% and offices 11% last year.
While the office market in 2005 showed improving fundamentals, with vacancy rates receding, a smaller number of very large projects were started. Work was started on only nine office projects valued at $75 million or more, compared to 19 in 2004.
The manufacturing building category in 2005 grew 5% in dollar volume, helped by the start of three very large semiconductor plants.
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12 Months 2005 |
12 Months 2004 |
% Change |
|
Nonresidential Building |
$171,851 |
$163,396 |
5% |
|
Residential Building |
$378,354 |
$332,489 |
14% |
|
Nonbuilding |
$101,166 |
$94,517 |
7% |
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Total Construction |
$651,371 |
$590,402 |
10% |
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