Office construction spending dips

After a surge last spring, spending on office construction fell in the second half of 2004 but should advance 11% this year and 18% in 2006, due to a strengthening economy. The weak office market caused an unexpected rise in the CB Richard Ellis third-quarter office vacancy rate, up 0.2 to 16.8%. The recent weakness included both financial and general-purpose offices, while public offices (25% of the market) increased slightly. Developers and lenders became cautious when unexpectedly low employment gains were reported at midyear. But job increases have since remained higher, and are expected to increase by a million-plus by the end of 2005, with a similar gain in 2006.