Total construction spending in the U.S. softened in August, but in the Upstate the outlook is good, according to experts.
Since 2011, construction deliveries and net absorption are up while vacancy rates have declined for office, industrial, flex and retail space, said J. Terrence Farris, a Clemson University associate professor.
“Things are looking pretty good,” Farris, who focuses on urban renewal history and futures research, said at a recent commercial real estate market forecast luncheon in Greenville.
Developers are building about 1 million square feet of retail space in the Upstate each year, he said.
“As I like to tell our students, that’s like one regional mall a year,” Farris said.
Since 2001, 6 percent of single-family and 70 percent of multifamily permits in Greenville County have been in the city of Greenville, Farris said.
“Single family is still going to be built at the edge (of Greenville),” he said. “There are going to be infill opportunities in the city. But this is something that’s going to affect retail and office and locations of all kinds of different uses.”
Sam Bullard, senior economist with Wells Fargo Securities Economics Group, said that in August, construction spending pulled back for the second consecutive month.
The loss of spending momentum was broad based, with lower readings in residential, nonresidential and public spending, Bullard said.
Following a downwardly revised 0.3 percent decline in July, construction spending fell 0.7 percent in August. Private sector outlays declined 0.3 percent, while public sector spending tumbled 2.0 percent.
Private nonresidential construction, which has been on a roll recently, took a breather in August, led by declines in commercial, power and manufacturing, Bullard said.
While the August report proved soft, construction spending
continues to reflect a sector with positive momentum, he said. Through the first eight months of the year, construction spending is up 4.9 percent from the same period in 2015.
“Anticipation for the continuation of the U.S. economic expansion and a low interest rate environment supports our outlook for moderate construction spending gains in the quarters ahead,” Bullard said.
