The value of construction starts will increase by 6.5% in 2016 to $562 billion, according to the latest projections from CMD Group and Oxford Economics. And the nonresidential building portion of that total is expected to rebound from its decline in 2015 and show single-digit growth this year.
CMD/Oxford estimates that the dollar volume of nonresidential building (which was off by 3% in 2015) will increase by 3.5% to $193 billion this year. That compares to the 12.9% gain, to $247 billion, that CMD/Oxford anticipates for residential building, and the 0.4% decline, to $122 billion, for engineering/civil construction.
The country’s GDP is expected to inch up by 2.4% this year.
CMD/Oxford expects nonresidential building to rise to by 5.1% to $203 billion in 2017, and to hit $222.7 billion by 2020.
After a down year in 2015, nonresidential building is expected to ease upward this year, driven by low umemployment, borrowing costs, and output trends in relevant sectors. Chart: CMD Group
The short-term drivers of nonresidential building are expected to include the country’s unemployment rate, which CMD/Oxford forecasts will fall to 4.8% this year. Other variables that should contribute to the growth of nonres building are population trends (CMD/Oxford estimates another year of 0.8% growth), improvements in the outputs in certain sectors, and the still-low cost of borrowing money for construciton and investment.
Alex Carrick, CMD’s chief economist, notes that the depreciation of the U.S. dollar is likely to “blunt” industrial starts. On the other hand, increased state and federal spending on infrastructure projects and an improved investment outlook are expected to bolster the values of nonresidential building.
Broken down by sector, CMD/Oxford sees the value of construction for retail and offices easing upward from this year through 2020. Hotel/motel building will be essentially flat. Manufacturing could take a sharp dip this year, and then recover over the proceeding four years. Warehouse construction will be down slightly in 2016, but bounce back in the out years. Medical starts, which are expected to increase by 8.6% in 2016, will then settle around 5% annual growth from 2017 to 2020, as they ride the crest of an aging population.
CMD/Oxford also breaks down nonresidential building by that industry’s four largest states. Texas will be slightly down in 2016 and then flatten with modest increases over the next few years. After a decline in 2015, California’s nonres construction value will move upward, with a particularly strong rise expected for 2020. New York, which was also down in 2015, should see gains, whereas Florida should enjoy about a $1.5 billion jump in values in 2016, and then level off a bit.
Medical building should be one of the bright spots for nonresidential builidng, which is expected to stay positive over the next five years. Chart: CMD Group
Related Stories
Market Data | Apr 30, 2020
The U.S. Hotel Construction pipeline continued to expand year-over-year despite COVID-19 in the first quarter of 2020
Many open or temporarily closed hotels have already begun or are in the planning stages of renovating and repositioning their assets while occupancy is low or non-existent.
Market Data | Apr 29, 2020
5 must reads for the AEC industry today: April 29, 2020
A new Human performance Center and Construction employment declines in 99 metro areas.
Market Data | Apr 29, 2020
Construction employment declines in 99 metro areas in March from 2019
Industry officials call for new state and federal funding to add jobs.
Market Data | Apr 28, 2020
5 must reads for the AEC industry today: April 28, 2020
A virtual 'city-forest' to help solve population density challenges and planning for life in cities after the pandemic.
Market Data | Apr 27, 2020
5 must reads for the AEC industry today: April 27, 2020
Colleges begin building campus eSports arenas and PCL Construction rolls out portable coronavirus testing centers.
Market Data | Apr 24, 2020
6 must reads for the AEC industry today: April 24, 2020
Take a virtual tour of Frank Lloyd Wright's Robie House and Construction Contractor Confidence plummets.
Market Data | Apr 23, 2020
Construction Contractor Confidence plummets in February
As of February 2020, fewer than 30% of contractors expected their sales to increase over the next six months.
Market Data | Apr 23, 2020
5 must reads for the AEC industry today: April 23, 2020
The death of the department store and how to return to work when the time comes.
Market Data | Apr 22, 2020
6 must reads for the AEC industry today: April 22, 2020
Repurposed containers can be used as rapid response airborne infection isolation rooms and virtual site visits help control infection on project sites.
Market Data | Apr 21, 2020
ABC's Construction Backlog Indicator down in February
Backlog for firms working in the infrastructure segment rose by 1.3 months in February while backlog for commercial and institutional and heavy industrial firms declined by 0.6 months and 0.7 months, respectively.