Marcum LLP Reports Increase in Commercial Construction Spending

Commercial construction spending in the second quarter of 2017 increased 13 percent from the same period last year and office construction rose 11 percent, according to the latest Marcum Commercial Construction Index. However, these bright spots contrast with a decline of 3.1 percent in overall nonresidential construction spending in June year-over-year and a monthly drop of 2.0 percent from May 2017. The index is produced by the Construction Services Group of Marcum LLP.

Anirban Basu, the author of the report, attributes the relative strength of the commercial and office subsectors to the ecommerce boom. He also notes that June spending in communication construction increased 4.9 percent year-over-year and 2.8 percent from May 2017. The only other subsector to record a gain was health care, with a 2.8 percent annualized improvement, although monthly results in the sector declined 0.2 percent in June.

?With interest rates remaining at low levels, investors have been chased up the risk spectrum, including into commercial real estate. That has helped to raise property values and prompt new construction. These dynamics have also helped lift industry backlog and support profit margins,? Mr. Basu wrote.

Spending in all 12 of the remaining nonresidential construction subsectors retreated on both an annualized and monthly basis. The largest declines came in public sector spending, including conservation and development (-20.6 percent and -7.3 percent, respectively), sewage and waste disposal (-16.8 percent and -2.4 percent), and water supply (-16.4 percent and -3.7 percent).

?”The infrastructure boom we have been waiting for has not arrived as of yet. Business attitudes and the business environment and confidence remain high for the moment. Backlogs in the private sector are healthy. Investment is robust. It?s my hope that we can turn some of this momentum towards infrastructure, sooner rather than later,”? says Joseph Natarelli, national leader of the Marcum? Construction Services Group and an office managing partner in New Haven, Conn.

Current economic trends in the construction industry will be discussed in depth at the upcoming annual Marcum Construction Summits in Ft. Lauderdale, Fla., on Sept. 7; New Haven, Conn., on Sept. 27; and New York City on Oct. 23. Mr. Basu will keynote all three conferences, which are presented in partnership with the construction industry?’s leading trade organizations and industry publisher. For registration and information, visit here.

One of the leading construction accounting firms in the U.S., Marcum LLP’s Construction group provides audit, consulting, and taxation services to clients ranging from start-ups to multi-billion-dollar enterprises. The group’s professionals are frequent industry authors and speakers and also serve as technical reviewers for the AICPA?s construction audit and taxation guides. In addition to the quarterly Marcum Commercial Construction Index, the group publishes the annual Marcum JOLT Survey Analysis, a discussion of employment trends in the construction industry. For more information, visit the website.

For the complete Marcum Commercial Construction Index, visit the Marcum LLP website.

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