by Calculated Risk on 2/02/2009 02:38:00 PM

Let's start with a stunning graph ...

Click on graph for larger image in new window.

This graph shows investment in lodging (based on data from the BEA) as a percent of GDP. The recent boom in lodging investment has been stunning. Lodging investment is now at 0.34% of GDP - an all time high - but all evidence suggests this investment is about to decline sharply.

Note: prior to 1997, the BEA included Lodging in a category with a few other buildings. This earlier data was normalized using 1997 data, and is an approximation.

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

This is probably due to builders finishing projects or perhaps the numbers will be revised downwards. But it does appear new mall construction is about to stop.

As David Simon, Chief Executive Officer or Simon Property Group, the largest U.S. shopping mall owner said last week:

"The new development business is dead for a decade. Maybe it’s eight years. Maybe it’s not completely dead. Maybe I’m over-dramatizing it for effect."

The third graph shows office investment as a percent of GDP since 1972. Office investment increased slightly in Q4 2008. With the office vacancy rate rising sharply, office investment will probably decline all this year.

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).

I expect investment in all three categories - malls, lodging and offices - to decline sharply in 2009.