Major renovation projects—those costing more than $100,000—climbed as a share of total nonresidential construction as the recession began and haven’t yet come down, breaking from historic patterns.
In a low-growth environment, many companies can’t justify adding or expanding to their facilities, said Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds. Instead, business leaders are trying to make better use of existing structures to minimize costs.
Updates to commercial, manufacturing, and institutional structures made up 26.7% of total nonresidential building starts in the first eight months of 2013, little changed from the 26.3% average in 2010-2012 following the 18-month recession that ended in 2009. That compares with 18.8% in the prior decade. Renovations are forecast to grow 2% this year to $41.9 billion.