Review of April 1 through April 5 in Construction

There was more good news regarding the construction industry last week. According to the U.S. Census Bureau announced last week that construction spending for the month of February grew 1.2% from the previous month and 7.9 percent above February 2012. See the press release here. The improvement of construction spending month-over-month and year-over-year can be seen below (as provided by Bill McBride at www.calculatedriskblog.com):

A lot of the growth is due to the residential sector, but non-residential construction is up 6% year-over-year. This news is good for larger general contractors (like the ones I deal with and that my students go to work for). However, public construction spending (for things such as roads, schools, etc.) is down 1.5% year-over-year. So, it's a bit of a mixed bag, but overall, it's good news. And the housing sector tends to be a leading indicator for larger commercial and civil structure construction, so there may be better news on the horizon.

In other news...

There was an article on the proposed new Apple campus in Cupertino, CA in Bloomberg Businessweek on April 4. According to the article, the 4-story, 2.8 million square-foot headquarters building's proposed cost has ballooned to ~$5 billion dollars (~$1,800/SF). There is an effort underway to value engineer $1 billion from the cost.

Some people are piling on and questioning the wisdom of 1) constructing a building that is a giant donut (this type of space arrangement can actually isolate employees, which is is counter to the Silicon Valley ethos of creating spaces that increase the probability of chance meetings and collaboration, and 2) building an elaborate (ostentatious?) self-celebratory structure. I'm not going to weigh in on this because my attitude is that if you don't like how Apple spends it's money, you're free to sell your stock. Apple is sitting on a 12-figure cash stockpile, and they have to spend it somehow (with real estate having certain beneficial tax advantages). If you don't own stock in Apple (and presumably don't live in the shadow of the proposed structure), why do you care? But what I will mention is that there will almost certainly be a halo effect in that multiple additional peripheral structures will be constructed (hotels, banks, law firms, accounting firms, etc.). Also, as a net zero energy building pushing the edges of design and construction, the AEC industry will certainly learn something from this project (good, bad or otherwise). So net-net, I think this will be good for the construction industry.