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August 22, 2007

What's up with construction?

The housing market nationally continues to take hits and some blame the bad news from residential construction for the recent stumbles on Wall Street. But N.C. State University economist Mike Walden says there's a part of the construction market that's doing well.

"It is the nonresidential part of construction that's doing well -- that is, the construction of office buildings and commercial buildings," says Dr. Walden, a North Carolina Cooperative Extension specialist. "In fact recently nonresidential construction has accounted for almost third of all economic growth in the economy. And while residential construction has been a drag on the economy in the last year, nonresidential construction has actually been a big plus.

"Now this is encouraging -- one reason being that nonresidential construction is a long-run investment," he adds. "Investors are putting down millions of dollars betting that people will come to use that office building or use that commercial building.

"And so real estate investors, which really nonresidential people are, are indicating by the money that they are putting their money down that they are bullish on the economy over the long run," Walden concludes. "And despite the fact that we may have some economic stumbles going on right now, if long-term investors are bullish that's obviously good for things down the road."

Posted by deeshore at August 22, 2007 08:00 AM