Our chart tells the story -- while spending on U.S. residential construction topped out in late 2005, spending on non-residential construction continues to soar.

And the trends so evident here in the U.S. are magnified many times over in fast-growing emerging markets. In China, for example, millions of new drivers take to the roads each year -- new car sales are on track to hit 6 million vehicles in 2007. All these drivers need a modern highway system, and that means big spending on roads.

And consider the burgeoning economies in cities like Mumbai, Shanghai and Beijing -- all that business development adds to strong demand for new office space.

With these points in mind, here are some of the major non-residential construction markets that are likely to see growth in the coming years, both in the U.S. and abroad . . .

Power Construction
According to the U.S. Department of Energy, Chinese demand for electricity is set to jump more than three-fold between 2004 and 2030. And as the chart below shows, India isn't far behind.

The end result of all that demand: a new power plant opens in China nearly once per week. The nation is building all sorts of plants, from traditional coal-fired facilities to the massive Three Gorges hydroelectric project to a fleet of modern nuclear plants. But even then, parts of China are still plagued by rolling blackouts -- rapidly rising demand simply overwhelms supply, despite the heady pace of new plant construction.

And China and India aren't the only nations that are short of power. While U.S. power consumption growth can't match that of China, it's still steadily rising. In fact, over the past summer electricity demand soared to record levels in parts of the country. Electricity generation capacity simply wasn't sufficient to meet that demand, causing blackouts in some cases. And the situation isn't going to get any better immediately -- the U.S. simply hasn't built enough power plants to keep pace with growing demand.

But that's changing. Utilities have filed permits for the first new nuclear power plants since the 1970's. And coal plants are still breaking ground, despite environmental objections from some quarters.

Bridges and Roads
This summer, the devastating collapse of the Interstate-35 West Bridge in Minneapolis, Minnesota made headlines all over the world. This wasn't some minor backcountry crossing -- it's estimated that more than 140,000 motorists traversed the span each and every day. Tragically, thirteen died in the collapse, while more than 100 were injured, many seriously.

While the cause of the collapse hasn't been officially revealed, the bridge was cited as "structurally deficient" by the federal government due to corrosion. Like most bridges in the U.S., the I-35 bridge was decades old, built and opened for traffic in 1967. Unfortunately, a horrifying 75,000 bridges nationwide have also been certified as structurally deficient -- many are as old or older than the Minneapolis I-35 bridge.

The devastating collapse has prompted many state, local and federal officials to re-examine bridges with potential structural deficiencies. Already, as a direct result of the Minnesota disaster, some bridges are being closed or weight restricted for repairs.

And road construction isn't just about safety -- we've all complained about traffic at one point or another. The Texas Transportation Institute (TTI) published a survey in 2003 measuring the amount of time commuters spend stuck in traffic each year across 75 of America's largest cities. The results are astounding -- the TTI estimates that drivers waste more than 5.7 billion gallons of gasoline per year sitting in traffic jams -- and that's just in just the 75 urban areas studied. With gasoline at $3 per gallon, that's a more than a $17 billion annual drain on the economy.

And that's only part of the cost. The study also showed that commuters wasted some 3.5 billion hours annually on the road. And that's not to mention the environmental effects -- the longer it takes to make a journey, the more pollution a car emits. The all-in cost to the U.S. economy: more than $70 billion annually, or about $520 per person.

Many of the nation's major roadway systems date back to the 1950's and 1960's, when there were far fewer cars on the road. For years, this growing problem was largely neglected. However, that's starting to change, as U.S. roadway construction spending has risen sharply over the past two years.

Water Infrastructure
While $100 per barrel crude oil and $3 per gallon gasoline get a lot of press, water shortages rarely make the national news. Of course, few think of that, because water is assumed to be safe and almost free -- most of us take clean water for granted.

But perhaps that's naive. Over the past five years, several major cities have been forced to issue "boil water" alerts to protect consumers against contaminated water systems.

And safety isn't the only issue -- consider that many water systems in major cities across the developed world date from before World War II. For example, according to the World Wildlife Fund, ageing leaky pipes and reservoir systems waste 300 Olympic-sized swimming pools worth of water per day in London; last summer that city was forced to issue water restrictions due to a shortage. And in the United States, a severe drought in the Southeast has left Atlanta's key reservoirs with less than a 90-day supply of water.

And outside the U.S., the problem is even more severe. Strong population growth in the Middle East and Asia is forcing governments to spend on desalination plants and reservoirs. In China, for example, the government has forecast that by 2030, the nation may have a more than 50 trillion gallon annual water shortfall -- that's more water than China currently consumes in a year. The country plans a series of projects to help alleviate the problem, but many remain concerned about water shortages ahead of the Beijing Olympics next summer.

Office Buildings
While sales of U.S. residential properties have weakened notably over the past two years, the same cannot be said of office buildings. According to statistics published by CB Richard Ellis, the U.S. office vacancy rate -- a measure of what percentage of U.S. offices are without a tenant -- stood at 12.6% at the end of the third quarter. That's actually down considerably from the 13.2% vacancy rate from just one year ago.

In many downtown markets, availability is even tighter -- the vacancy rate in these markets stands at just over 10%, the lowest reading since early 2001. Thus, demand is tight enough to continue prompting developers to build new office space.

And once again, some foreign countries make the U.S. market look weak in comparison. In Singapore, for example, strong growth in the financial services industry has triggered a boom in demand for premium office real estate -- rents have tripled since 2003. Rents actually hit a new all-time record in the third quarter of 12.6 Singaporean dollars per square foot.

With all of these points in mind, companies that build the roads, water systems, office parks and power plants the world so desperately needs stand to benefit from a wave of spending in the coming years. In the text that follows, we profile two of our favorite plays on the boom in non-residential construction spending . . .

Important Note: Throughout the rest of this article, StreetAuthority.com co-founder Paul Tracy provides an in-depth look at his two favorite non-residential construction stocks. However, in order to view the remainder of this article, you'll need to subscribe to his premium newsletter -- the StreetAuthority Market Advisor. After you subscribe you'll receive immediate access to this full article, as well as his monthly Market Advisor newsletter and a host of additional premium content. Please visit one of the following links to continue...
 

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Paul Tracy co-founded StreetAuthority.com and became the firm's Chief Investment Strategist in 2001. He also co-founded TopStockAnalysts.com in 2006. Prior to that he spent several years as Managing Editor at a multi-million dollar financial publishing firm with over 150,000 subscribers. In addition to his role as managing editor and lead financial writer, he was also responsible for equity research and managing a team of seasoned professional financial writers, researchers and market commentators.

Paul's previous experience includes a position at Robert W. Baird & Co.'s full-service brokerage operations as well as economic research work on a Money and Banking project funded by the National Bureau of Economic Research. He has also spent time doing outside consulting and research for the University of Virginia, has appeared as a guest expert on several prominent financial radio shows, and has been a featured speaker at various investment conferences across the U.S.

Paul graduated with a B.S. in Finance and Management from the McIntire School of Commerce at the University of Virginia.

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