“I’m not buying into the proposition that the nation’s construction industry will recover in 2013,” he said during the conference. “What we have right now is an utter lack of confidence in the economy, and confidence represents a centrally important requirement for construction spending growth. It’s really hurting, no sector of the economy has lost more than construction, we’re still down two million jobs.”

Kermit Baker, chief economist at the American Institute of Architects, said during Tuesday’s news conference that he sees several reasons for the lack of confidence. “Non-residential construction feeds off of residential construction, and that remains very weak,” Baker said. “Financing is there, but it’s just beginning to thaw, and the broader economy is seeing uncertainty from the Euro debt crisis.”

The Good News

John Sikaitis, director of office research for Jones Lang LaSalle, tells GlobeSt.com that the majority of office construction today is concentrated in nine markets – Boston, Cleveland, Houston, New York City, Philadelphia, San Antonio, San Francisco, Silicon Valley and Washington, DC – accounting for almost 80% of all work now underway. He says only 25% of the major markets have construction levels equal to or greater than 1% of the total existing office inventory. In comparison, since the late 1980s, national office under construction to inventory ratios averaged 2.9%.

That’s still good news, he says, because with no new product, rents will go up as supply gets short, and demand will continue to build in secondary and tertiary markets.

“I agree we’re still way below historical norms,” Sikaitis says. “And it’s true that companies are getting skittish about office demand levels and the European debt problems. We are seeing tenants moving to the sidelines to rethink real estate decisions.”

This indecision is showing up everywhere, even in NYC and DC, the first markets out of the gate. Though the two giants make up almost half of all new office construction, leasing has cooled somewhat. In New Jersey, CBRE is reporting half as many 100,000-square-foot or more deals as last year.

To Sikaitis, however, the time is ripe for office development for many markets, primarily because even if fundamentals aren’t improving yet, they will be by the time new towers deliver four-to-six years from now. “There’s still two-to-three years to back into the window of opportunity,” he says. “The vast majority of office projects that have broken ground are warrented, and will probably do quite well, as in any recovery cycle the developers who break ground first are often able to obtain the best results.”

Secondary Not Ready

The secondary and tertiary markets, however, may have a little bit more to time in the vacancy rinse cycle, says Dave Menke, SVP and general manager of the Opus Group. The company announced Tuesday that it will construct a new office building for Xcel Energy in Minneapolis, creating a two-building campus, as part of a more than $160 million city block redevelopment that includes a 33-story apartment tower. The office is a build-to-suit, the only likely development the local market is seeing today, Menke says.

“In the Twin Cities, there are certain submarkets that are starting to show some large block needs, and at some point the demand will reach a point where new building will be the only choice,” he says. “But for the most part, in most submarkets, there’s still enough space to satisfy needs. We’re just still lacking the growth fundamentals.”