 |
Healthcare construction spending grew at a compound rate of more than 10% for seven years through mid-2008, but has stalled since then. The stall, however, still represents better growth than almost any other construction market during the recession, which deepened as a result of the fall 2008 credit freeze.
During the stall, hospital construction spending increased 9% from the period before the credit freeze, while spending for nursing homes and other residential care facilities dropped 20% and spending for specialized medical office buildings fell 17%. Hospital construction spending is projected to remain steady through 2010, rising only as a result of higher project costs.
Hospital managers are enjoying a steadily rising revenue stream from patient care, but offsetting that are concerns about possible cuts in fees from states for āfree careā and cuts in Medicaid and Medicare. As a precaution, some projects have been trimmed back or deferred.
The recent slowing trend for medical offices and residential care buildings parallels trends in other developed financed sectors, although the slowdown began later and so far has been less severe. Some developers lost credit access because of weakened income and balance sheets. Others lost credit access because lenders are concerned about cash flow coming from new capacity in a depressed economy. Bank examiners have also been steering regional and local lenders away from nonresidential mortgages. As a result, those two small commercial healthcare sectors will continue to decline, along with other commercial properties, through the winter. Following that, they will decline further because spending for other commercial properties will have begun to expand and projects in the pipeline will have fallen substantially.
Look for healthcare construction spending to return to a 10% annual growth pace in 2011, reflective of the usual cyclical surge after a recession. The rebound for hospital construction spending results from delayed stimulus plan funding and the resumption of work that was put on hold while healthcare was debated in Washington. āJim Haughey, BD+C economist
Related Stories
| Aug 11, 2010
A few bright spots for AEC firms in 2010
The AEC industry is heading into 2010 in better shape than was the case a year ago, according to the 2010 AEC Industry Outlook: Strategy and Insight for Design & Construction Firms, a new forecast released by ZweigWhite this month. A significant turnaround for the commercial market isn't anticipated until 2011, but a modest pickup is expected in late 2010.
| Aug 11, 2010
Earthquake engineering keeps airport grounded
Istanbul, Turkey's new 2.15 million-sf Sabiha GƶkƧen International Airport opened on October 31, 2009, becoming the world's largest seismically isolated building. Arup's global airport planning and engineering team, in collaboration with architects Dogan Tekeli Sami Sisa Mimarlik Ofisi and contractor LIMAK-GMR JV, working within an 18-month timeline, designed and built the facility wi...
| Aug 11, 2010
New Ways to Improve Water Efficiency
In the U.S. and most of the industrialized world, building occupants take for granted the simple convenience of filling a glass with clean, drinkable water at the kitchen sink. Yet worldwide, nearly a billion people globally have no access to safe drinking water, according to the Natural Resources Defense Council.
| Aug 11, 2010
Embassy's dual faƧades add security and beauty
The British government's new 46,285-sf embassy building in Warsaw, Poland's diplomatic quarter houses the ambassador's offices, the consulate, and visa services on three floors. The $20 million Modernist design by London-based Tony Fretton Architects features a double faƧadeāan inner concrete super structure and an outer curtain wall.
| Aug 11, 2010
Cost of HVAC equipment to remain flat in 2009, says Turner
While some manufacturers have announced slight increases in facilities equipment pricing for 2009, the average cost of equipment is expected to remain flat in 2009, according to the 2009 Turner Logistics Equipment Cost Index. However, equipment pricing could face increased pressure if there is a further decline in market demand.
| Aug 11, 2010
Citizenship building in Texas targets LEED Silver
The Department of Homeland Security's new U.S. Citizenship and Immigration Services facility in Irving, Texas, was designed by 4240 Architecture and developed by JDL Castle Corporation. The focal point of the two-story, 56,000-sf building is the double-height, glass-walled Ceremony Room where new citizens take the oath.
| Aug 11, 2010
Toronto mandates green roofs
The city of Toronto late last month passed a new green roof by-law that consists of a green roof construction standard and a mandatory requirement for green roofs on all classes of new buildings. The by-law requires up to 50% green roof coverage on multi-unit residential dwellings over six stories, schools, nonprofit housing, and commercial and industrial buildings.
| Aug 11, 2010
Modest recession for education construction
Construction spending for education expanded modestly but steadily through March, while at the same time growth for other institutional construction had stalled earlier in 2009. Education spending is now at or near the peak for this building cycle. The value of education starts is off 9% year-to-date compared to 2008.
| Aug 11, 2010
'Feebate' program to reward green buildings in Portland, Ore.
Officials in Portland, Ore., have proposed a green building incentive program that would be the first of its kind in the U.S. Under the program, new commercial buildings, 20,000 sf or larger, that meet Oregon's state building code would be assessed a fee by the city of up to $3.46/sf. The fee would be waived for buildings that achieve LEED Silver certification from the U.
