BOSTON-In an appearance at the Build Boston program here, McGraw-Hill economist Robert Murray said that New England could be hit harder than other regions as construction activity nationwide begins to wane. Murray pointed to rising interest rates and oil prices, the downturn of the stock market and international problems as indicators of this coming trend.

The New England region saw a 17% rise in construction this year to $21.6 billion. The best performers in 2000 have been income properties, which are up 12 %; public works, which are up 27%; and, institutional construction, which is up 28%. According to Murray, those areas will begin to deteriorate next year with a 4% decline in total construction anticipated.

“After a surge of activity in 2000, we’re looking at a slightly larger decline for New England as opposed to the rest of the United Stares,” says Murray. Money will be less available in Massachusetts next year, he believes, even though this area has some of the strongest market basis in the country for office and hotel product. Financial constraints, he adds, are limiting the ability for commercial projects to move ahead here–especially for hotels.

Murray predicts a 1.3% job growth for the next two years, which is down from 2.3% the previous two years. Because it is so expensive to live in the Boston area, it is less likely that there will be enough new workers coming from outside the area to ease the situation.

Despite Murray’s gloomy predictions, local firms see a rosy future. “We are carrying an enormous amount of activity for the next 12 to 18 months,” Mark David, senior vice president at Spaulding Slye Colliers Construction Group, tells “Industrial activity is starting to branch out. We don’t see any indication of a slowdown. The creditworthiness of some companies will become an issue and there will be some bumps in the road but there is such a significant volume of activity and vacancy rates are historically low. Buildings are pre-leased before the steel is up. For the construction industry these are opportunistic times.”

Nationally, Murray predicts a one percent increase in total construction in 2001 to $468.4 billion. This year the industry had a three percent growth and 10% growth in 1999. “A tighter credit environment is underway,” Murray pointed out, “and that should have a dampening on commercial development in 2001.”

For related news, click on: Insiders Debate Predictions That Construction Will Hit the Skids

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