Total construction spending held steady in October. Private residential construction turned up, but private non-residential construction continued sharply downward.

Private non-residential construction, which includes lodging, commercial and recreation sites, declined  in October at a seasonally adjusted annual rate of 20.6 percent from the year-earlier period, lagging characteristically behind private residential building declines, the U.S. Census Bureau reported Tuesday. The October pace was 2.5 percent below that of September.

But private residential construction in October rose at a seasonally adjusted annual rate of 4.4 percent from September, though it was still off 23.6 percent from October 2008.

The October seasonally adjusted annual rate for total construction dropped 14 percent to $910.77 billion from a year prior, but there was no change since September. October marked one year since private non-residential construction peaked at $426.32 billion, whereas private residential construction peaked in March 2006 at $676 billion, according to the Census Bureau.

Government construction spending in October slipped at a seasonally adjusted annual rate of 0.4 percent from September's pace, down 3.8 percent from October a year ago.

“First come the houses, then the strip malls, then the gas stations,” said Census Bureau analyst John Tremblay. “There’s always a lag.”

Villa Park, Ill.-based Keeley Construction Inc., a full-service industrial and commercial construction company, experienced the quintessential “lag” demonstrated in the Census Bureau’s most recent report. October 2008 was one of Keeley’s most prosperous months, quickly followed by a decline of nearly half the company's volume, according to president Bill Keeley.

“Last October was a very busy month for us. Normally it takes about a year of planning before we start working on a project,” Keeley said. “New construction has all but disappeared.”

Keeley wouldn’t specify how much money his company has lost, but he did disclose that the company derives most of its projects from distributors looking to rework existing buildings, or to combine multiple facilities under one roof to utilize space more efficiently.

“There’s 140 million square feet of vacant space in industrial buildings in the Chicago area," Keeley explained. "But that doesn’t account for the fact that most warehouses are probably only using 80 percent of their space. There’s more vacancy here than in L.A. or New Jersey.”

The Census Bureau reported that the sharpest construction decline occurred in the lodging sector with a 45 percent drop year-over-year.

“People aren’t spending a lot of money on big projects, especially in Vegas, where lodging was hit pretty hard,”  Census Bureau branch chief Mike Davis observed.

Conservation and development, however, experienced an increase of 22.5 percent as compared with October 2008, due in large part to levy projects in Louisiana, according to Davis.