Healthcare construction spending temporarily drops

June 01, 2008 |

Healthcare construction spending declined about 3% during the first quarter of 2008, following a 32% increase during the previous two years. Reed Construction Data attributes the decline to a drop in project starts, and expects the decline to be brief, with a projected 22% increase in healthcare construction spending by the end of 2009.

The decline and rebound is consistent with trends in other nonresidential markets. Developers and facility managers became very cautious at the onset of the 2008 recession, which was accompanied by delays and higher costs for construction financing and a new round of rapidly rising construction materials prices.

Over the past three months, hospital spending fell 6%, medical building spending fell 3%, and nursing home/assisted living spending rose 5%. These three healthcare sectors are largely independent and respond to different market drivers.

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