by Calculated Risk on 8/05/2008 03:18:00 PM

A couple more graphs based on the underlying details for the Q2 GDP report.

Based on tighter lending standards, rising vacancy rates (lower occupancy rate for hotels), and the Architectural Billing index, it appears there will be a sharp slowdown in investment in offices, malls and hotels in the 2nd half of 2008.

However, as of Q2 2008, only mall investment is declining - in fact, investment in lodging soared in Q2!

Click on graph for larger image in new window.

Investment in multimerchandise shopping structures (malls) declined slightly in Q2 2008, after peaking in Q4 2007.

Investment in lodging soared in Q2 to $46.1 billion (SAAR) from $40.4 billion (SAAR) in Q1. This is probably due to builders rushing to finish projects.

This investment in lodging will probably decline sharply in the 2nd half of '08 as builders cancel or postpone projects. As an example, from CNNMoney: Boyd Gaming suspends Vegas casino-resort project (hat tip Erik)

[C]asino operator Boyd Gaming Corp. announced Friday that it will stop work for nine months to a year on a $4.8 billion mega development.

The Echelon [includes] nearly 5,000 guest rooms in five hotels ...

The second graph shows office investment as a percent of GDP since 1972.

NOTE: In 1997, the Bureau of Economic Analysis changed the office category. In the earlier years, offices included medical offices. After '97, medical offices were not included (The BEA presented the data both ways in '97).

This shows the huge over investment in offices in the '80s due to the S&L lending. This graph also shows the office building boom associated with the stock market bubble. The office bubble is smaller this time, but I expect investment to decline for all three categories - offices, lodging and malls - in the 2nd half of 2008.