Public Sector to Remain Strong, as Commercial Construction Softens

Although public sector construction spending will increase, the commercial building market will continue to soften, predicted economist Raymond G. Torto, addressing a group of construction executives at a recent Construction Market Data/Construction Specifications Institute event.

“In the past three to five years, we have been in an extraordinary period, and the year 2000 was the party that gave us the hangover we are now suffering from,” said Torto, a principal with Torto Wheaton Research, Boston.

Torto also pointed out that the gross domestic product, which serves as a strong indicator of the real estate industry’s economic status, grew 5 percent annually in the late 1990s and the year 2000, whereas the GDP’s growth rate over the past 25 years has averaged just 3 percent annually.

While Torto did not forecast a recession, he stated that it would be unrealistic to expect a return to such a high rate of economic growth in the near future.

On the bright side, Torto noted, “There is a lot of good public construction money out there.”

He also advised that shifting business to the public sector for the next year to 18 months would be a very strategic move.

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