US nonresidential building seen down 20 pct in ’10

* Nonresidential construction spending seen down 20.3 pct

* Hotels seen down 43.3 pct, office category down 29.1 pct

* Survey cites oversupply, weak demand, tight credit

NEW YORK, July 14 (BestGrowthStock) – Spending on U.S.
nonresidential construction is likely to fall more than 20
percent this year before recovering slightly in 2011, according
to a semiannual survey by an architects’ trade group.

The survey’s consensus forecast calls for a 20.3 percent
decline in construction spending, according to the American
Institute of Architects.

The AIA cites an oversupply of nonresidential facilities in
most construction categories, weak demand for space, continuing
declines in commercial property values, and real estate
lenders’ reluctance to provide credit.

Recovery of nonresidential construction activity typically
lags a recovery in the wider economy, especially an employment
revival, which drives demand for office and retail space.

Conditions have deteriorated over the past year, even as
the wider U.S. economy has begun to rebound from recession. For
2010, survey respondents had forecast a 13.4 percent drop in
January and only a 12 percent decline a year ago.

Construction spending on hotels will drop more than 43
percent this year, construction of office buildings will
decline almost 30 percent, and retail and industrial categories
will be down more than 20 percent, the AIA said.

It forecast smaller declines for institutional categories
like amusement space, educational and religious facilities, and
health care buildings.

BETTER 2011

The AIA forecast single-digit gains in most categories in
2011, with an overall 3.1 percent increase in nonresidential
construction spending. That is a slightly improved outlook from
the prior survey in January.

The survey is based on forecasts by McGraw Hill
Construction, Global Insight, Moody’s economy.com, and others.

The AIA’s monthly index of billings by architectural firms
has indicated contraction since January 2008. It most recently
dipped in May, after three months of gains, dashing hopes that
a recovery was gaining traction. [ID:nN22237544]

Most diversified industrial companies garner at least some
revenue from the nonresidential sector, selling either
machinery used in construction or the guts of a building:
elevators, electrical and lighting systems, heating and cooling
and security networks, for example.

A partial list includes Honeywell International Inc
(HON.N: ), Tyco International Ltd (TYC.N: ), Ingersoll-Rand Plc
(IR.N: ), Johnson Controls Inc (JCI.N: ), Caterpillar Inc (CAT.N: ),
Deere & Co (DE.N: ), Terex Corp (TEX.N: ), Emerson Electric Co
(EMR.N: ), Parker Hannifin Corp (PH.N: ), Manitowoc Co (MTW.N: ),
Oshkosh Corp (OSK.N: ), ITT Corp (ITT.N: ) and Eaton Corp (ETN.N: ).
(Reporting by Nick Zieminski; Editing by Lisa Von Ahn)

US nonresidential building seen down 20 pct in ’10