Sharp Fall Reported in Most Types of Construction : * Housing: Less expensive homes are the only category to register an increase. Better results had been expected for multifamily units.


The Construction Industry Research Board said Thursday that all types of construction fell sharply in Orange County through most of last year except for houses, where building was up slightly.

Experts said less expensive houses--which in this county means those priced at less than $300,000--are still selling moderately well.

So construction of condominiums, apartments and other types of less expensive multifamily housing might also have been expected to increase. Inexplicably, that did not happen.

In fact, the research board said these types of units took a big dive in the first 11 months of last year, to 2,661 units from 8,379 the year before.

The research board said a statistical glitch may account for some of the drop. But experts said the multifamily category should have done better.

"Sure, rents have been disappointing, when you look at all the expenses of operating an apartment complex," said Dennis Macheski, research director for the Costa Mesa office of accountants Price Waterhouse.

"But there's a perception that vacancy rates will eventually drop and rents rise. Apartment complexes, in fact, are in demand now from institutional investors."

As for single-family houses, the local market seems to have reached rock bottom in 1990 and started fitfully on its way up last year, said Ben Bartolotto, research director for the industry group.

Construction of houses throughout the rest of the state dropped last year, Bartolotto said, but edged up slightly in the county during the first 11 months of 1991, to 3,335 houses from 3,278 in the same period of 1990. Many of the new houses were built in the southern, less-developed half of the county and were less expensive models.

"Orange County had a big decline in 1990," Bartolotto said, "so perhaps it didn't have so far to fall in 1991."

Expensive houses are still selling too, though at a more normal clip than during the frenzy of 1988 and 1989, when buyers snapped them up as soon as they came on the market.

"The market for them hasn't gone away," said Alfred J. Gobar, a Brea real estate consultant. "It's just a more normal market than it was during the boom.

"Our clients' $700,000 houses are selling about as fast as we thought they would--which is not very darned fast."

As for commercial real estate, mired in a swamp of overbuilt offices and tight credit, the drop in building was even steeper than in residential.

Permits for construction of about $124 million in office buildings were issued by local governments through November of last year. That was down from $196 million the year before and $316 million in 1989. More than one-fifth of the new office space built in the last few years is empty, and tenants paying low rents occupy much of the rest.

Industrial buildings were also down to $34 million worth of permits issued last year; there were $54 million in permits the year before and $131 million in 1989.

New stores were down to $114 million, from $192 million the year before.

Hitting Bottom

In an ominous sign for the commercial construction industry, the value of new permits issued for industrial and office space dropped to zero in November.

Source: Construction Industry Research Board

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