Hurricane rebuilding to take years; Louisiana last to recover.
The AIA report, The Economic and Construction Outlook in the Gulf States after Hurricane Katrina, forecasts the recovery prospects for the three states most impacted by Katrina: Louisiana, Mississippi and Alabama.
Current estimates have placed losses from Katrina in the $150 billion to $200 billion range, more than four times the damage incurred by Hurricane Andrew in 1992.
Approximately 275,000 to 300,000 homes were likely permanently lost to the region's housing stock, with an equal number likely in need of major improvements. Losses to the nonresidential building stock, as well as to public infrastructure, while significant, have not yet been accurately estimated, according to AIA.
"The rebuilding of residential and nonresidential buildings in this region is not simply a matter of replacing structures that were lost and renovating those that were damaged," the report stated. "These activities take place in the context of a broader regional economy, where the economic impacts from the hurricane also will determine the level of rebuilding activity."
Louisiana may take the longest to recover from Katrina, as the three key components for the state's economy--energy, transportation/port and leisure/hospitality--were dramatically affected by the storm. Due to their importance to the national economy, the energy and transportation sectors will likely get the most attention and rebound the fastest, said AIA.
Louisiana's economy is expected to decline or experience negative growth of between 3 percent and 4 percent during the second half of 2005 and remain essentially stable in 2006, meaning the Louisiana economy will not recover from Hurricane Katrina until 2007, noted the report.
Office employment is expected to decline through 2006, then recover by 2008. Retail sales are expected to grow by almost 5 percent per year through 2008, so commercial construction levels will largely serve to offset losses to the pre-Katrina inventory, said AIA.
Much of the reconstruction in Louisiana, particularly in the New Orleans area, will be delayed until the flooded areas are cleaned and a redevelopment plan is in place. By contrast, the reconstruction of Mississippi will begin sooner.
"While [Mississippi] employment levels no doubt fell in the third quarter, a rebound should begin by the fourth quarter, and pre-Katrina employment levels are expected to be reached by mid-2006," the report stated.
The economic base of the areas that sustained significant hurricane damage--the Mississippi coastal cities of Gulfport-Biloxi and Pascagoula--is heavily concentrated in the manufacturing sector and the leisure/hospitality sector. Both of these sectors are expected to see a fairly quick rebound, with a significant portion of the rebuilding completed by 2006.
Alabama was the least-affected of the three states, with Mobile being the principal area affected by the hurricane. A full recovery in employment levels has been forecast by the end of the fourth quarter of 2005, said AIA.
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|Title Annotation:||management of commercial construction|
|Date:||Dec 1, 2005|
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