Slowing demand at architecture firms last year is expected to contribute to a projected 5.7% decline in construction spending for 2021, according to a new consensus forecast from The American Institute of Architects (AIA).
The AIA Consensus Construction Forecast Panel—comprised of leading economic forecasters—expects steep declines this year in construction spending on office buildings, hotels, and amusement and recreation centers. Health care and public safety are the only major sectors that are slated to produce gains in 2021.
Growth in nonresidential construction is expected for 2022, with 3% gains projected for the overall building market matched by both the commercial and institutional sectors.
“The December jobs report confirmed that the economy needs additional support in order to move to a sustainable economic expansion,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “As pandemic concerns begin to wane and economic activity begins to pick up later in 2021, there is likely to be considerable pent-up demand for nonresidential space, leading to anticipated growth in construction spending in 2022.”
CLICK CHART TO LAUNCH INTERACTIVE CHART FROM AIA
Here are some takeaways from AIA's Chief Economist Kermit Baker, Hon. AIA:
• Hotel, airlines, and recreation industry jobs have been decimated by the pandemic. "The December jobs report confirmed that the economy needs additional support in order to move to a sustainable economic expansion. Of particular concern were the 500,000 payroll positions lost in the leisure and hospitality sector. That means that this sector has lost almost 25% of payroll positions since February 2020, matching losses in the airline industry."
• The $900 billion stimulus package passed in December 2020 is not nearly enough to sustain economic growth. "Key elements of this package include another $600 in direct payments to qualifying individuals, $300 per week in supplemental unemployment insurance for up to 11 weeks, and $280 billion designated for the Paycheck Protection Program, which provided incentives for small businesses to keep employees on their payrolls. These initiatives were generally very effective in providing a safety net for impacted households and small businesses last spring. However, they weren’t designed to provide sufficient support for an extended period of economic weakness, and the December jobs report suggests that we may already be heading into another down cycle. Even this additional funding is unlikely to provide sufficient financial support for economic growth through the entire vaccination period, suggesting that even more stimulus will be needed in the coming months or else our economy likely will be in for an extended period of stagnant growth or modest declines."
• Biden win bodes well for infrastructure investment. "With the two Georgia senate seats now in the democratic column, there are a new set of policy options for the Biden administration. Still, given the razor thin margins in both the House and the Senate, programs likely to be enacted will need to have at least modest levels of bipartisan support. An infrastructure program is likely near the top of the list of programs that both parties could support, and the Biden Administration seems ready to make this a priority, in part because it would be viewed as a stimulus program, but also because borrowing costs are near historical lows."
• Architecture firms are seeing more positive signs for the long-term. "Project inquiries from prospective and former clients have been strong recently, suggesting that new work may be picking up. More concretely, new design work coming into architecture firms has generally been more positive than billings in recent months, suggesting that firms are bringing in more project activity than they are completing. However, firms are seeing different business conditions regionally. Firms in the northeast saw the steepest downturns as the pandemic hit, and conditions remained the weakest for the remainder of the year. Business conditions at firms in the other three regions – all modestly declining – are fairly comparable."
Related Stories
Airports | Feb 28, 2023
Data visualization: $1 billion earmarked for 2023 airport construction projects
Ninety-nine airports across 47 states and two territories are set to share nearly $1 billion in funding in 2023 from the Federal Aviation Administration. The funding is aimed at help airports of all sizes meet growing air travel demand, with upgrades like larger security checkpoints and more reliable and faster baggage systems.
Seismic Design | Feb 27, 2023
Turkey earthquakes provide lessons for California
Two recent deadly earthquakes in Turkey and Syria offer lessons regarding construction practices and codes for California. Lax building standards were blamed for much of the devastation, including well over 35,000 dead and countless building collapses.
Sports and Recreational Facilities | Feb 27, 2023
New 20,000-seat soccer stadium will anchor neighborhood development in Indianapolis
A new 20,000-seat soccer stadium for United Soccer League’s Indy Eleven will be the centerpiece of a major neighborhood development in Indianapolis. The development will transform the southwest quadrant of downtown Indianapolis by adding more than 600 apartments, 205,000 sf of office space, 197,000 sf for retail space and restaurants, parking garages, a hotel, and public plazas with green space.
Architects | Feb 27, 2023
Hord Coplan Macht announces retirement of Founder/CEO Lee Coplan, FAIA, and names successor
Hord Coplan Macht, an award-winning integrated architecture, interior design, landscape architecture, and planning firm, announces the retirement of Founder and Chief Executive Officer Lee Coplan, FAIA. Lee leaves behind a long and celebrated career leading the practice over the last four decades while bringing innovative design strategies and leadership to the architecture and design community.
Libraries | Feb 26, 2023
A $17 million public library in California replaces one that was damaged in a 2010 earthquake
California’s El Centro community, about two hours east of San Diego, recently opened a new $17 million public library. With design by Ferguson Pape Baldwin Architects and engineering services by Latitude 33 Planning & Engineering, the 19,811-sf building replaces the previous library, which was built in the early 1900s, damaged by a 7.2 earthquake that struck Baja California in 2010, and demolished in 2016.
Architects | Feb 24, 2023
7 takeaways from HKS’s yearlong study on brain health in the workplace
Managing distractions, avoiding multitasking, and cognitive training are key to staff wellbeing and productivity, according to a yearlong study of HKS employees in partnership with the University of Texas at Dallas’ Center for BrainHealth.
University Buildings | Feb 23, 2023
Johns Hopkins shares design for new medical campus building named in honor of Henrietta Lacks
In November, Johns Hopkins University and Johns Hopkins Medicine shared the initial design plans for a campus building project named in honor of Henrietta Lacks, the Baltimore County woman whose cells have advanced medicine around the world. Diagnosed with cervical cancer, Lacks, an African-American mother of five, sought treatment at the Johns Hopkins Hospital in the early 1950s. Named HeLa cells, the cell line that began with Lacks has contributed to numerous medical breakthroughs.
Arenas | Feb 23, 2023
Using data to design the sports venue of the future
Former video game developer Abe Stein and HOK's Bill Johnson discuss how to use data to design stadiums and arenas that keep fans engaged and eager to return.
Museums | Feb 22, 2023
David Chipperfield's 'subterranean' design wins competition for National Archaeological Museum in Athens
Berlin-based David Chipperfield Architects was selected as the winner of the design competition for the new National Archaeological Museum in Athens. The project will modernize and expand the original neoclassical museum designed by Ludwig Lange and Ernst Ziller (1866-1874) with new spaces that follow the existing topography of the site. It will add approximately 20,000 sm of space to the existing museum, as well as a rooftop park that will be open to the public.
Multifamily Housing | Feb 21, 2023
Watch: DBA Architects' Bryan Moore talks micro communities and the benefits of walkable neighborhoods
What is a micro-community? Where are they most prevalent? What’s the future for micro communities? These questions (and more) addressed by Bryan Moore, President and CEO of DBA Architects.