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Credit Freeze Chills Construction Starts

ATLANTA-A local economist says building values are down 2.5% YTD, to $243 billion.

By Carl Cronan | Updated on November 25, 2008

ATLANTA-The national credit freeze is having a chilling effect on commercial construction starts, according to locally based Reed Construction Data. Contract values this year through October totaled $242.7 billion, down 2.5% from the first 10 months of 2007.

Construction starts in October alone were down 14% overall from September, yet were up 11% from last October. “It is very clear in the month-to-month change in starts for private commercial properties that were expected to be hit first and hardest by the credit access and cost problems,” Jim Haughey, chief economist for Reed Construction Data in suburban Norcross, stated in the latest Construction Industry Snapshot.

Construction starts for private offices, retail buildings, warehouses and hotels dropped 38% in October from the previous month, to their lowest level since early 2004, Haughey said. The four private commercial markets accounted for three quarters of the month-to-month decline, he added.Manufacturing facilities and nursing homes accounted for the other 25% of the October decline. These are also private markets that get construction funds from financial markets, Haughey said.

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