This industry consists of general contractors primarily engaged in the construction of residential buildings other than single family homes. This type of construction includes new work, additions, alterations, remodeling, and repair of such establishments as apartment buildings, dormitories, and hotels and motels.
Commercial and Institutional Building Construction
Multi-Family Housing Construction
Multifamily residential construction enjoyed strong sales and a promising market for new projects in the late 1990s as the U.S. economy maintained its voracious expansion. And even when the economy began to falter at the turn of the twenty-first century, multifamily residential construction continued to do well, despite the increase in home ownership spurred by low interest rates. Demand for multifamily housing was expected to increase by 1 percent annually until 2010.
After apartment construction had outpaced demand through the early and mid-1990s, resulting in increased vacancy rates, contractors were forced to scale back new starts and derive greater shares of revenue from remodeling and repairs, a market that was expected to maintain its strong growth for years to come. By the end of the decade, however, demand had resurfaced, leading to a resurgence of new building activity. This activity continued into the early 2000s. New apartment starts in 2003 increased by 2.8 percent to 316,000 units, although this paled in comparison to the record 1.49 million single-family housing starts, which reflected 10.3 percent growth that year.
Hotel construction, meanwhile, remained a notoriously volatile sector. In the early 1990s, construction spending had reeled from a recession, dropping 35 percent in 1991 and another 47 percent in 1992. By 1995 the sector had dusted itself off and regained its healthy position in the construction industry, reaching $6.4 billion. Total spending for hotel construction reached $17.0 billion in 1999, up from $14.9 billion in 1998, and was particularly strong in the luxury hotel market. Analysts familiar with gluts in this market sector, however, had expected that hotel building would cool, as did the U.S. economic expansion, and they proved correct. Along with the impact of the economic slowdown, the terrorist attacks of September 11 drastically reduced U.S. travel, and by 2003, hotel construction had reached its lowest point in industry history, a full 53 percent below its record high in the late 1990s. According to a Pricewaterhouse Coopers report, hotel occupancy rates will increase from 59.1 percent in 2002 to 61.6 percent in 2005 as the U.S. economy recovers.
Leading multifamily construction markets in 2004 were located mostly in the South or West: Dallas, Texas; Orlando, Florida; Houston, Texas; Atlanta, Georgia; and Seattle, Washington. Hotel construction, meanwhile, has been strongest in the Pacific and mid-Atlantic regions, while...