CONSTRUCTION of United States office and retail buildings is poised to fall for the rest of this year and through 2009 on lower demand from tenants, stricter lending standards and rising building costs, the American Institute of Architects said yesterday.
Office-building construction will likely drop 3.7 percent this year and 12.3 percent next year, the Washington-based group said in its semiannual Consensus Construction Forecast. Construction of shopping centers and other retail buildings is forecast to fall 8.3 percent this year and 9.9 percent next year, Bloomberg News reported.
"The more pessimistic forecasts this round stem from the lack of growth in the overall economy, the ripple effect from the faltering housing market and the anxiety in the credit markets leading to a restriction in lending for all types of construction projects," said Kermit Baker, the institute's chief economist.
The slowing US economy is cutting demand for space from retail and office tenants, and the cost of construction materials has increased 37 percent since 2004, more than double the rise in the cost of consumer products and services, the American Institute of Architects said.
Petroleum-based materials and commodities such as steel and concrete "have experienced sharp price increases in recent years," Baker said.
Hotel construction probably will increase 6.6 percent this year before dropping 9.9 percent next year, the institute said.
Construction of warehouses and other industrial properties is forecast to rise 4.6 percent this year and decline 5.5 percent next year, while healthcare facilities will likely rise 0.2 percent.