This has been a decidedly down year for office building construction activity, and prospects remain dim for any significant relief until late 2003. Vacancy rates should soon top out in most major metropolitan markets, but demand for new space won't build until the U.S. economy starts creating many more jobs than it's been able to generate over the past year-and-a-half.
The value of new office building and renovation work completed through August 2002 was running 28.1% below the total for the first two-thirds of 2001. Year-to-year declines have stabilized during the past several months — no worse than in the spring of this year, but no better.
Full-year 2002 spending for construction work on office buildings will come in 25-30% below the 2001 total of $52.0 billion, which itself was 6.4% lower than the spending total realized during 2000. This followed a three-year-period (1998-2000) when annual growth in the office construction market averaged 17.6%.
