The value of office starts jumped over 40% in March from an usually weak February total but this is not a trend that will persist. 1st quarter office starts are more than 20% below the brief, probably exaggerated, peak a year earlier and about on track with the starts trend since late 2006.

Reed Construction Data expects both starts and job site construction spending to be flat to slightly down in the next few months and then resume expanding later this year and through next year at an inflation adjusted pace that is above overall economic growth.

The stall in office construction spending since September is not a signal that the office building boom is over. The expansion to date is 80% growth over 56 months. the previous expansion from 1993-01 was 175% over 86 months — followed by a deep four year slump to absorb the surplus space.

There is plenty of room for the current expansion to resume later this year and persist into 2010 or beyond at a 10% plus nominal growth rate including inflation without creating a pril 2008 huge problem with surplus space, similar to 2001.

The growth of office rental rates has slowed and vacancy rates have edged up slightly from already above average levels. But so far the worsening or market conditions still leaves them in the “good” range and is substantially, if not entirely due to the now ten month slowdown in economic activity including four months (counting April) of job cuts in office based industries.

Any delay in the expected return to net job growth in office based industries within 4-5 months will be accompanies by an extended and deeper drop in office project starts.