On the Rise

According to F.W. Dodge’s Construction Outlook 2002, the main points for this year’s construction market include the following:

• Single-family housing will retreat through early 2002, as home sales and construction are adversely affected by the weak job market and diminished consumer confidence. When uncertainty eases, homebuyer demand will be able to show a greater response to low mortgage rates. The full year is projected at 1.175 million units (F.W. Dodge basis), a 2-percent decline from 2000, which translates into no change in dollar terms.

• Public works construction will advance 2 percent, as continued expansion for highways and bridges counters a slower pace for other public works categories.

• Electric utilities, following robust growth the previous four years, will begin to settle back as the post-deregulation surge in new power plant construction eases.

• Income properties will slide an additional 3 percent in dollar volume, corresponding to a 5-percent drop in square footage. The steepest decline is projected for hotels, while stores, warehouses, and offices will experience more moderate retrenchment. Apartment construction is the income property type most likely to avoid a decline, since it continues to be viewed favorably as a target by the real estate finance community.

• Institutional building will advance 3 percent, due to further expansion for schools combined with a moderate increase for healthcare facilities. However, reduced contracting is expected for courthouses, churches, amusement-related projects, and airport terminals.

• Manufacturing building is expected to edge up 2 percent, as its extended four-year decline reaches bottom in early 2002. The category will still be extremely weak by historical standards, down 35 percent in dollar terms from its most recent peak in 1997.

Go to part 3 - The Beat Goes On