Tuesday, March 04, 2008

WSJ on CRE Slowdown

by Bill McBride on 3/04/2008 12:58:00 AM

From the WSJ: Building Slowdown Goes Commercial. A few excerpts:

In the past few years, builders aggressively put up stores and strip malls amid easy financing and resilient consumer spending. Spending on construction of shopping centers leapt 67% in 2007 from 2005 levels.

Last year, developers built 144 million square feet of retail projects in the top 54 U.S. markets and are slated to build another 131 million square feet this year, according to Property & Portfolio Research Inc., a Boston research company. Property & Portfolio Research calculates that demand justified 36% of the new space built last year and will support 15.7% of the space slated to be completed this year.

A sign that construction is about to cool off, perhaps sharply: The American Institute of Architects' monthly index of billings at architecture firms was down 14% in January from its peak in July. That means fewer construction projects will start this year, said AIA Chief Economist Kermit Baker.
There are many other details in the story - it definitely appears the CRE slump has started.