Construction spending hit all-time high in September

Earlier this month the Commerce Department noted that construction activity rose 0.5% to an all-time high of $1.12 trillion in September. This is likely due to builders taking advantage of historically low interest rates. The Fed, of course, continues pushing up rates--this will undoubtedly slow construction activity. Analysts believe that construction activity will get a boost from the massive rebuilding required after a string of devastating hurricanes but they don't think this activity will be enough to offset a slowdown in the rest of the country triggered by rising interest rates.


WASHINGTON (AP) -- Construction spending set another record in September as the building industry continued to enjoy boom times.

The Commerce Department said construction activity rose 0.5 percent to an all-time high of $1.12 trillion at a seasonally adjusted annual rate in September as builders took advantage of interest rates that are still low by historical standards.

However, analysts believe that activity is likely to slow in coming months as the Federal Reserve keeps pushing interest rates higher to combat inflation pressures stemming from the spike in energy prices that occurred following the hurricane-related energy production shutdowns along the Gulf Coast.

Private economists believe the hurricanes and the related jump in energy prices will reduce as much as a full percentage point from growth in the second half of this year.

The government reported Friday that the overall economy expanded at an annual rate of 3.8 percent in the July-September quarter. But analysts said growth would have been well above 4 percent without the drag caused by the hurricanes, which have cost more than a half-million jobs.

The 0.5 percent increase in construction spending in September followed strong gains of 0.6 percent in both August and July.

Analysts believe that construction activity will get a boost from the massive rebuilding required after a string of devastating hurricanes but they don't think this activity will be enough to offset a slowdown in the rest of the country triggered by rising interest rates.

Home mortgage rates have broken through the 6 percent level and analysts believe they will keep heading higher in coming months.

Private construction rose by 0.6 percent to a seasonally adjusted annual rate of $871.5 billion with private residential building up an even stronger 1 percent, to $624.3 billion. Both the overall private construction figure and the residential activity were at all-time highs.

Both office construction and commercial buildings, a category that includes shopping centers, showed big gains in September.

Total government construction was unchanged in September at an annual rate of $248.5 billion after posting a 0.4 percent increase in August. Activity at the state and local level rose by 0.3 percent to a record high of $231.9 billion while federal building projects dipped by 4.5 percent to an annual rate of $16.7 billion.

By Martin Crutsinger
AP Economics Writer
11/01/2005

The Boulevard -- Saint Louis

Pace Properties recently constructed Phase I of The Boulevard -- Saint Louis on property located across Brentwood Boulevard from the St. Louis Galleria. Phase one includes 120,000 square feet of retail, restaurant, and commercial space', including Crate & Barrel, Maggiano's Little Italy, and PF Chang's. Allegro Apartments are also part of Phase I. Allegro Apartments' 74 units range in price from $1000 / month for an efficiency to $2400 / month for a two bedroom unit with a den.

Phase II has just been announced. This $140 million expansion will include a 21 story, 112 unit luxury condominium tower and 33 "Main Street" condos at a cost of $50 million. A new hotel and 110,000 square feet of retail will complete the phase at a cost of $90 million. This phase will be located on the south end of the current complex.

The new condo tower will be called Valencia Place and will feature units that range between 800 and 2,700 square feet. According to a representative from Pace Properties, there is a great deal of interest from retailers looking to move to Phase II. An important trend in the current real estate market is to combine residential, retail, and restaurant spaces in developments.