Aug
21

U.S. Construction Shifts Into Second Tier

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Construction projects in cities across the country that stalled during the economic downturn now are getting the green light, an indication that the real-estate recovery is spreading beyond a handful of urban areas.

The construction of office buildings, hotels and apartment buildings picked up in New York, San Francisco and Boston several years ago. Now activity is spreading to Atlanta, Chicago, Las Vegas and a number of other cities that are finally seeing a pickup in employment, economists say.

“What’s turning around is businesses are just comfortable enough that…they need to start expanding some of their facilities,” said Kermit Baker, chief economist at the American Institute of Architects. “There’s a lot more optimism out there.”

A year ago in Atlanta, for example, building office towers without tenants wasn’t feasible in much of the city. Developers struggled to fill up towers built just as the recession began. As vacancy rates climbed, some developers defaulted on their construction loans and mortgages on completed buildings. Tishman Speyer Properties surrendered a 20-story tower to creditors.

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