Construction projects are getting the green light as the real estate recovery spreads to a handful of urban areas. In New York, San Francisco, and Boston, the construction of apartments, hotels and office buildings has increased. Construction is also picking up in Atlanta, Chicago, Las Vegas and a number of other cities nationwide. These cities are finally seeing a pickup in employment and a demand for new construction.
High vacancy rates and leasing struggles are in the past for Atlanta. The city is now ready for more construction. Tishman Speyer Properties broke ground on a 30-story, 500,000 SF office tower in the Buckhead area. The company believes this is the right time to build in Atlanta with vacancy rates below 17 and significant job growth.
The monthly Architecture Billings Index is another sign that shows increase construction activity. The index, based on the theory that developers hire design firms six to nine months before breaking ground, is a leading indicator of future construction activity. The index increased in July to 55.8 from its previous 12-month average of 51.3. Scores over 50 indicate an increase in billings for design firms, while a score under 50 means a decrease in billings.
The Architecture Billings Index is not the only indicator that shows an increase in a construction trend. Private, nonresidential construction spending increased $4 billion from June 2013, and office spending reached its highest level in five years. These indicators are making companies and residents feel better about making long-term decisions.