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 | Mar 26, 2020
Senate coronavirus relief bill's tax and lending provisions will help construction firms, but industry needs additional measures
Construction officials say measure will help firms cope with immediate cash flow crunch, but industry needs compensation for losses.
Market Data | Mar 25, 2020
Engineering and construction materials prices fall for first time in 40 months on coronavirus impacts, IHS Markit says
Survey respondents reported falling prices for five out of the 12 components within the materials and equipment sub-index.
Market Data | Mar 23, 2020
Coronavirus will reshape UAE construction
The impact of the virus has been felt in the UAE, where precautionary measures have been implemented to combat the spread of the virus through social distancing.
Coronavirus | Mar 20, 2020
Pandemic has halted or delayed projects for 28% of contractors
Coronavirus-caused slowdown contrasts with January figures showing a majority of metro areas added construction jobs; Officials note New infrastructure funding and paid family leave fixes are needed.
Market Data | Mar 17, 2020
Construction spending to grow modestly in 2020, predicts JLL’s annual outlook
But the coronavirus has made economic forecasting perilous.
Market Data | Mar 16, 2020
Grumman/Butkus Associates publishes 2019 edition of Hospital Benchmarking Survey
Report examines electricity, fossil fuel, water/sewer, and carbon footprint.
Market Data | Mar 12, 2020
New study from FMI and Autodesk finds construction organizations with the highest levels of trust perform twice as well on crucial business metrics
Higher levels of trust within organizations and across project teams correlate with increased profit margins, employee retention and repeat business that can all add up to millions of dollars of profitability annually.
Market Data | Mar 11, 2020
The global hotel construction pipeline hits record high at 2019 year-end
Projects currently under construction stand at a record 991 projects with 224,354 rooms.
Market Data | Mar 6, 2020
Construction employment increases by 43,000 in February and 223,000 over 12 months
Average hourly earnings in construction top private sector average by 9.9% as construction firms continue to boost pay and benefits in effort to attract and retain qualified hourly craft workers.
Market Data | Mar 4, 2020
Nonresidential construction spending attains all-time high in January
Private nonresidential spending rose 0.8% on a monthly basis and is up 0.5% compared to the same time last year.
