Commercial construction in Connecticut has flourished in recent years. The Waterbury Arts Magnet School, above, was completed in 2004.

Nonresidential construction’s gains have nearly offset the industry’s losses on the residential side.

The national, seasonally adjusted annualized rate for all construction spending was $1.18 trillion through May, down 2.8 percent from the prior year, according to data from the U.S. Census Bureau. While the residential side fell 17.3 percent to $556 billion in that same period, nonresidential gained 15.4 percent to $621 billion.

Under the nonresidential umbrella, industry professionals are seeing strength from the industrial sector.

“Right now, most industrial markets in the [United States] are strong,” said Nick Morizio, president of Colliers Dow & Condon in Hartford. Space for high-technology manufacturing is one of the industrial market’s drivers, he added.

The annual rate of construction spending in manufacturing climbed 15.5 percent to $38.5 billion nationally, according to the Census Bureau data.

“The dollar is weak compared to the world market,” Morizio said. “It’s making it cheaper to do these things domestically. We compete very well.”

Jeff Kirby, a commercial agent for Lebanon-based Lyman Real Estate, has found a pocket of demand for industrial property in Groton.

“There’s a significant lack of industrial buildings in the Groton area,” Kirby said. Three recent industrial land sales along Leonard Drive have come as a result, he added.

The sales, worth a combined $700,000, total 6 acres. One buyer, W&H Development, plans to develop 25,000 square feet of industrial condos. Another, 210 Innovations, is relocating its wheelchair accessories manufacturing business. And the third, Larry’s Auto Machine, is building a new facility for its engine modification business.

“All three [buyers] were looking for a site where the land was affordable – that had public utilities and the convenience factor of access to Interstate 95,” said Kirby, who was the sole agent on all the deals, representing the seller, Terra Firma Enterprises. In addition to the three deals just closed, Kirby brokered another Leonard Drive sale in early 2006 to a fence company, he said, and he has two more potential buyers close to signing contracts for industrial land there.

“That has become a very warm area,” Kirby said.

‘Following a Trend’

Some elements of nonresidential construction appear to be getting help, indirectly, from the residential side.

“It’s all sort of following a trend,” said David King, vice president of New Britain-based architectural firm Kaestle Boos Assoc. As a given community grows and attracts more residents, so grows the need for projects like improvements to schools and emergency services, he said.

In Connecticut alone, the firm is currently working on eight school projects in Stafford, Avon, New Britain, Watertown and a joint project for Burlington and Harwinton. One of those projects is a new, 83,200-square-foot elementary school in Stafford. The other projects represent a mix of expansion and renovation work. In addition, the firm is expanding and renovating both a fire station in Watertown and a police station in West Hartford. More feasibility studies for more emergency services buildings are in the works, King added.

The national annual rate for both educational and public safety construction spending posted healthy gains, according to the Census Bureau report. Educational construction increased 12.5 percent to $95.4 billion, and public safety construction gained 21.5 percent to $9.5 billion.

Outside of education and public safety construction, King said, “I see that retail is probably stronger than other sectors.”

But not just any retail. King referred to mixed-use developments, such as Blue Back Square in West Hartford. The 550,000-square-foot development features retail, restaurant, office and residential space.

“That follows the trend for people who want to live close to where there’s stuff going on,” King said. Blue Back Square and similar developments have a pedestrian quality, mimicking “old-fashioned Main Street,” he said.

“But you’re also seeing where this type of development is being done in bits and pieces,” King said.

In 2004, for example, Kaestle Boos Assoc. completed its work on the $47 million restoration of the Palace Theater. The project, part of Waterbury’s downtown revitalization efforts, included a new seating plan, orchestra pit and stage house, as well as the restoration of both the theater’s interior and exterior. Next door, the firm designed the new, $54 million Waterbury Arts Magnet School for grades 6 through 12.

As the downtown gained more of a sidewalk and “human scale” feel, restaurants and nightclubs began to spring up, King said. “All of this other stuff spins off of it,” he added.

But of all the different segments of construction spending broken out in the Census Bureau report, the lodging sector has posted the biggest gains by far.

A new hotel chain backed by Wall Street is looking to expand into New England, with as many as 14 locations in Connecticut alone, Kirby said. The list may include two locations in New London County and four sites each in Hartford, New Haven and Fairfield counties, he noted.

“It’s going to be huge,” said Kirby, adding that the work will begin late in 2007 and “next year in earnest.”

The national annual rate of construction spending for lodging jumped up 69 percent to $28.8 billion, according to the Census Bureau.

But the increases in construction spending could represent more than just new or expanding buildings.

“Some of that relates to the cost of construction materials as opposed to the number of projects,” King said. Increased demand has been pushing the price of materials higher, he said.

Attorney Barry L. LePatner has a different take on the rising dollar amount being spent on construction.

“It is a highly inefficient industry,” LePatner said. “One out of every two dollars an owner spends on construction does not go into the building.”

His New York-based law firm, LePatner & Assoc., represents clients looking to protect themselves from cost overruns in construction work. He also has authored a book titled “Broken Buildings, Busted Budgets,” slated for release Oct. 1, which deals with the inefficiencies LePatner sees in the industry.

Materials costs have gone up, but “that masks the true reality,” said LePatner, who added, “The construction industry alone since 1964 has lost 25 percent of its productivity per worker.”

Part of the problem is that construction companies will low-ball bids just to get the contract, then “find a thousand different ways to run up the cost,” LePatner said.

Another problem stems from the size of the companies doing the work, he said. Of the 7.6 million construction workers nationwide, 92 percent work for shops with 20 or fewer employees, he said.

A general contractor doing a large project will hire dozens of those shops, and if one crew from any of those shops fails to stick to the schedule, “the whole project is slowed down,” LePatner said.

“We can’t afford to allow this to go on,” he said. “This [book] is about an industry that time has forgotten.”