According to a new report from the American Institute of Architects, the nonresidential building sector is expected to see a healthy rebound through next year after failing to recover with the broader economy last year.
The AIA’s Consensus Construction Forecast panel—comprising leading economic forecasters—expects spending on nonresidential building construction to increase by 5.4 percent in 2022, and accelerate to an additional 6.1 percent increase in 2023. With a five percent decline in construction spending on buildings last year, only retail and other commercial, industrial, and health care facilities managed spending increases.
This year, only the hotel, religious, and public safety sectors are expected to continue to decline. By 2023, all the major commercial, industrial, and institutional categories are projected to see at least reasonably healthy gains.
“The pandemic, supply chain disruptions, growing inflation, labor shortages, and the potential passage of all or part of the Build Back Better legislation could have a dramatic impact on the construction sector this year,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Challenges to the economy and the construction industry notwithstanding, the outlook for the nonresidential building market looks promising for this year and next.”
CLICK HERE TO VIEW INTERACTIVE CHART
More from AIA:
- The recovery in the broader economy in 2021 didn’t carry over to the nonresidential building sector. Spending on the construction of these facilities declined about 5%, on top of the 2% decline in 2020.
- The broader economy has seen a solid recovery since the depths of the pandemic-induced recession. It grew by about 5% last year and now has fully recovered from the past recession. There were almost 4 million net new payroll positions added last year, bringing national employment almost back to the level it was at in February 2020 prior to the pandemic. The national unemployment rate was 3.9% at the end of last year, just above the 3.5% rate in February 2020.
- In spite of these positive economic indicators, there are several headwinds to future economic growth. The uncertainty surrounding combatting Covid and its variants have added tremendous uncertainty to future building needs. The Biden Administration’s Build Back Better program was slated to add significant support to the construction sector, but its funding is very much in doubt at present (January 2022). Supply chain disruptions are likely to continue slow economic growth well into this year. Inflation accelerated during the second half of last year to its highest rate in almost four decades, which is expected to put upward pressure on interest rates. Finally, the already-serious labor shortages look to become even more severe this year and next.
- Industries throughout the economy are finding it challenging to retain their current employees and are having difficulty recruiting new ones. Most workers feel that jobs are plentiful, and therefore are increasingly comfortable leaving their current job in favor of searching for a better one. A recent survey of architecture firm leaders found that more than four in ten feel that recruiting architectural staff is a serious problem at present, and that it may create difficulties for the firm over the coming months given anticipated project workloads.
Related Stories
Market Data | Jul 27, 2020
6 must reads for the AEC industry today: July 27, 2020
Customized labs give universities a recruiting edge and the U.S. construction pipeline remains robust through the first half of 2020.
Market Data | Jul 27, 2020
The U.S. construction pipeline remains robust through the first half of 2020, despite pandemic
Projects currently under construction stand at 1,771 projects/235,467 rooms, up 3% and 1% respectively, YOY.
Market Data | Jul 24, 2020
5 must reads for the AEC industry today: July 24, 2020
North Carolina will stop relying on FEMA flood mapping and Cal Poly Pomona's newest project.
Market Data | Jul 23, 2020
New LEED guidance from USGBC helps cities and communities expand resilience efforts in response to the COVID-19 pandemic
Credits integrate public health and social equity with sustainability planning.
Market Data | Jul 23, 2020
6 must reads for the AEC industry today: July 23, 2020
Skanska selects Pickard Chilton to design new ofice tower and days grow long at nursing homes as virus lockdowns drag on.
Market Data | Jul 22, 2020
6 must reads for the AEC industry today: July 22, 2020
Phase one of Toronto's The Orbit detailed and architecture billings remains in negative territory.
Market Data | Jul 21, 2020
Nonresidential building spending to decline through 2021
The commercial building sector is expected to be the hardest hit.
Market Data | Jul 21, 2020
7 must reads for the AEC industry today: July 21, 2020
Abandoned high-rise becomes mixed-use luxury apartments and researchers are developing anti-coronavirus tech for buildings.
Market Data | Jul 20, 2020
Construction employment rises from May to June in 31 states, slips in 18
Recent data from Procore on jobsite workers’ hours indicates employment may have leveled off.
Market Data | Jul 20, 2020
6 must reads for the AEC industry today: July 20, 2020
Never waste a crisis and robotic parking systems help developers optimize parking amenities.