December was slow for construction

COMMERCIAL REAL ESTATE

February 09, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

A slow December capped a year that marked a slight downturn in a key measure of residential construction coupled with a recovery that made only a dent in the non-residential construction recession, according to a report by the Baltimore Metropolitan Council.

Building permits for single-family homes, up 31 percent in December compared to December 1992, were off 19.1 percent for the full year, according to the council, which tracks data from the city of Baltimore and from Baltimore, Howard, Anne Arundel, Harford and Carroll counties.

Nonresidential building permits were a totally different story. Local governments authorized only $8.9 million of new nonresidential construction in December, down from $15.3 million the year before. But for the year, commercial construction was up 42 percent, to $317.9 million.

"The residential numbers [for the full year] are a little misleading," said Michael A. Conte, director of the Regional Economic Studies program at the University of Baltimore.

He said the losses in building permits were concentrated in the first half of the year, when consumer confidence in the economy was still low.

But he said orders for new homes were picking up substantially later in the year, a trend he said would show up in much stronger residential building permit and construction trends this year.

"1994 is the year where we'll see the mushrooming in building permits" for new homes, he said. "I'm certain that's occurring now."

On the commercial side, Mr. Conte said government stimulus, including Gov. William Donald Schaefer's decision to speed up some state construction work, kept conditions from being worse than they were in a sector held back by an office building construction market that he called "dead, dead, dying and deader." An unusually large $80 million appropriation for school construction also boosted the market.

"I expect that [state construction activity] to continue," Mr. Conte said, especially because the state's fiscal situation isn't as difficult as in recent years.

The biggest project in Baltimore City is a $1.2 million addition to Sinai Hospital; the largest in Baltimore County is a $4 million project at McCormick & Co.

Drop in optimism indicated in survey

A new study by a New Jersey firm claims that the modest recovery the nationwide construction business has seen in the last two years will slow some in 1994, pointing to a drop in optimism among construction companies and their suppliers.

The CIT Group of Livingston, N.J., said its 12-year-old "Optimism Quotient" is pointing south for the first time in three years. In 11 of the measure's 12 years, the industry has gone up when the OQ is 100 or more and fallen when it is below 100. This year it's 94.

The better news locally is that the part of the country that includes Maryland -- the South Atlantic corridor stretching from Delaware to Florida -- has the nation's highest OQ, at 120.

"A year ago, respondents from the South Atlantic region set a record for confidence in local construction activity, when their combined Optimism Quotient reached 120," CIT President Robert J. Merritt wrote.

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