Commercial Remodeling Vs. Commercial New Construction – Is There a New Norm?


It’s been more than eight years since the Great Recession in which both commercial and residential construction took a hit. The drastic drop happened quickly, but where is the market headed now, specifically for the commercial space?

We recently compared commercial new construction and commercial remodels over the course of the Great Recession. Based on the findings of our residential study, we suspected there might also be a similar trend in the commercial construction data.

Additions, remodels, and alterations (ARAs) on commercial structures took a meager dip after the construction market downturn when compared to new commercial construction permits. At its lowest point, commercial ARAs took a 9.7% drop from the pre-crisis numbers.

Though not identical, the trends we saw in commercial remodeling were similar to the trends in residential remodeling. They both recovered after the housing crisis, but commercial remodeling dipped slightly below its pre-crisis peaks after it gained ground in 2013.


You can see that the upward trend starts as far back as 1999, and is interrupted only minimally before continuing its upward trajectory.

The decline of new commercial construction permits was significantly deeper, plummeting 39% after 2008 and continuing its slump through 2011. Between 2008 and 2011 there was a staggering 43% plunge.

Perhaps the most interesting finding was that new commercial construction permits are still far from reaching their pre-crisis levels. In fact, they’re sitting at 20% below where they were at their best.


To recap:

  • New commercial construction permits took a dramatic plunge of 39% after 2008 and are still at 20% below pre-crisis peaks.
  • Commercial remodeling permits took less of a hit with just a 9.7% dip after 2008, and gained ground by 3% in 2013; they’re currently sitting at just .7% below pre-crisis peaks.


“Commercial remodeling has stayed on its upward trajectory,” said Holly Tachovsky, CEO at BuildFax, “except for the small dip that we see during the construction downturn. On the other hand, commercial new construction saw a substantial downtrend that lasted for three years, and still remains below pre-crisis levels. Like we saw with residential remodeling, it appears as though commercial remodeling activity is less volatile than new construction activity.”

These new remodeling numbers reveal huge opportunities to understand property condition as structures are updated over time and the businesses that inhabit them. Given the consistency of the data across the last decade and a half, we anticipate this upward trend to continue.

To get the complete data from this study, please leave your contact below.

[pardot-form id=”11102″ title=”Commercial Remodeling Study – Get Data”]Methodology: 

For this study, BuildFax looked at data from its database of building permit records. The data used includes commercial new construction (new construction of a commercial building) and remodeling project counts (work on an existing commercial structure) by year from 1999 – 2015.