In October we wrote about how commercial lending is up for real estate projects. Now, just recently released figures show construction spending for the U.S. hotel market is way up. According to U.S. Census Bureau data, spending in the hotel industry through July was up nearly 30% to $15.2 billion. Furthermore, architecture firms are also beginning to slowly build up their project backlog levels, a positive sign that more work is flowing in. The AIA’s Architecture Billings Index for September registered a 54.3 (any score higher than 50 indicates billings growth).
As of September, there were a total of 2,767 projects in the U.S. comprising 333,775 rooms in the construction, final planning or planning stages, according to STR, a company that gathers lodging industry supply, demand and performance data from hotels located in more than 160 countries.
The increase in construction spending for hotels is also due in part to renovation projects, with much of the work focused on infrastructure improvements, including heating, ventilation and air conditioning; lighting systems; power; and mechanicals. Guest-facing areas are also seeing work, such as lobbies, restaurants and meeting rooms, for example.
Moreover, total construction activity rose to a seasonally adjusted annual rate of $915.1 billion in August, the strongest performance since April 2009. Other industries, in addition to hotels that saw gains in construction spending, include office buildings and shopping centers.
Geographic areas are also seeing a boom in construction. The New York City Construction Outlook 2013-2015, in support from the New York Building Foundation for example, estimates total construction spending will reach $31.5 billion this year, greater than the previous high of $31.1 billion recorded in 2007 and a 14% increase from $27.6 billion last year. The number will keep rising to $33.4 billion in 2014 and $37 billion in 2015, the report estimates. The Building Congress forecasts 2.9 million square feet of office space will be in construction in seven Manhattan office towers during 2014, 2.6 million of which is located at the World Trade Center and the West Side. Other cities seeing an uptick in construction growth include Dallas, Houston, San Antonio, Phoenix, Boston, Los Angeles, Seattle, and Atlanta.
This is all good news for the construction industry, which suffered tremendously after the economic collapse. It’s also good news for those of us in a position to help developers and owners protect their assets and property with a comprehensive, broad insurance and risk management program. IPOA specializes in insuring properties across the country, including hotels, offices, restaurants, municipalities, senior living housing, retail, among others. Give us a call to discuss opportunities to expand your footprint in key markets. Contact us at: 877.653-IPOA (4762).
Sources: U.S. Census Bureau, HotelNewsNow, The Observer, Forbes