Commercial Construction Posts First-Half Jump

FW Dodge is estimating non-residential contracts this year to rise to slightly more than $3 billion, about a 16.5% increase from the $2.6 billion in 2003. And in 2005, it is forecasting $3.3 billion in non-residential contracts. However, that will still lags the $3.5 billion in contracts in 2001.

Retail construction in Colorado was off 5% from a year ago, but there were larger declines in public building, down 61%; amusement, down 68%; industrial, down 39%; and office, down 40%. Those categories combined account for 30% of the activity.

So where was the growth? Hospital construction was up a whopping 392%, accounting for 37% of the contracts the first half of the year. Schools and colleges accounted for another 15% of non-residential construction contacts and they were up 17%. In fact, if those sectors are removed, non-residential construction was down 25.2%, Adams notes.

As far as commercial real estate, Adams notes that in terms of vacantspace, most sectors are showing positive signs this year, after a four-year slump. She notes Fuller and Co. expects a gradual recovery in all market sectors. And she notes Frederick Ross Research statistics show the office vacancy rate in mid-year stood at 22.8%, the retail vacancy rate was at 9.5%, and the industrial vacancy rate was 9%. All were down slightly form their 2003 peaks, Adams says.

But "Colorado Springs Realtors reported a very weak office market and a flat industrial market at mid-year, with tenants all looking for a deal," Adams says. "According to Turner Commercial Research, the office vacancy rate at mid-year was 9.4%, the industrial vacancy rate was 1.2%, and the retail vacancy rate was 7.6%."

But overall, she is optimistic. "Growth appears to be firmly under way in Colorado and will continue through 2005 unless the national recovery is derailed," she says.