Nonresidential construction posts 'surprising weak performance'

Nonresidential construction posted a surprising weak performance during the first quarter, according to the economic gurus at Wells Fargo Economics Group. 

Most of the 12 percent annual decline came from a sharp pullback in natural gas exploration and production, according to the bank's Commercial Real Estate Chartbook Quarter 1, released today. The office, retail, power, lodging, amusement and recreation sectors also posted declines, the authors reported.

Despite the large drop in nonresidential spending during the quarter, the economists remain "somewhat optimistic that nonresidential construction will make a positive contribution to economic growth in the coming quarters," the report says.

Nuclear power plant construction is expected to boost construction, including such projects underway in South Carolina, the authors say.

On a more positive note, demand for income-producing properties continues to increase, particularly for apartment and warehouse properties, the report says. 

Apartment rents are rising fastest in the areas benefiting from growth in mobile computing and social networking, such as San Francisco, San Jose and Austin.  Chattenooga saw significant rent increases because of a Volkswagen assembly plant that opened last year, as did Charleston thanks to the Boeing assembly plant that is drawing skilled workers to the area.