The value of office starts in 2008 is holding steady, according to Reed Construction Data. While the level of starts in the first quarter of 2008 is 24% below the brief 30% jump in starts in winter 2007, rising office construction is not yet over.
Office starts are expected to resume expanding next year when issues with credit access, costs, and declining employment in office-based industries fade. As always, public office construction commands a larger share of the market at this phase of the business cycle. Public facility managers are spending budget reserves whereas private developers are being cautious until an end to the recession is in sight.
Office construction spending is currently 7% above the same point last year, but 80% above June 2003, 56 months ago when the office building expansion began. Without an overheated ending, the current expansion can continue at least through 2010 with about 10% nominal spending growth. The numbers translate to approximately 5% lower square footage growth than that in renovation work, which is typical during the late stages of an expansion period.