Puerto Rico Economic Pulse ©

October 1998: Construction Mania

Where will it lead us?

There is an extraordinary amount of energy in construction today, some of it optimistic, some bewildering. During 1997, the construction boom in PR accounted for almost half the 3.2% real growth of the economy. Is this sustainable? Public construction concentrated on infrastructure projects, instead of public housing. Private construction concentrated on housing, instead of industrial and commercial building.  In the SJ metro area, industrial construction shrank 47%. Paradox: the commercial space grew a hefty 26%, while retail sales increased by 8%. Sounds like shopping space overbuilding?  As consumer debt and the number of bankruptcies continue climbing, retail activity will lack luster. Manufacturing downsizing will not spur an increase in the demand for industrial space. This article addresses the issue of whether a continuation of this mix will increase productive capacity, which means future growth.