Real nonresidential construction tumbled at a record 44 percent annual rate during the first quarter, subtracting over two percentage points from real GDP. A large portion of the drop was due to a pullback in oil & gas drilling and exploration. Building activity is also winding down, particularly in office and commercial construction which includes multi-tenant retail space. The economic downturn and tight credit conditions should continue to put downward pressure on nonresidential construction for the next couple of years. Moreover, lower prices for commercial real estate mean that it is much cheaper to buy properties than it is to develop them.
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