The United States is on track to end this year with its highest level of construction put in place since 2008, a total that, if achieved, would represent nearly 7% of the country’s GDP.
However, construction has slowed of late, according to FMI Corporation, the management and investment consultant. In its Q2 Construction Outlook, FMI estimates construction in place this year would rise 5% to $1.012 trillion. In the first quarter, FMI had projected an 8% annualized gain.
FMI estimates the nonresidential building portion of total construction to expand by 7.6% to $407.2 billion in 2015, and to keep growing through 2019, when it should reach $510.2 billion. However, with housing also expected to recover strongly during this period, nonresidential building’s share of total construction put in place would fall in 2019 to 39.1%, from 40.2% in 2015.
Construction spending in general “continues to build on the rapid growth experienced in the industry last year,” observes Chris Daum, FMI’s senior managing director and president of Investment Banking. FMI’s latest report looks at 17 sectors. Here are some highlights:
• Don’t anticipate much from the two big-ticket sectors, Healthcare and Education, says FMI.
Even with 2.5 million students expected to enroll over the next four year, FMI doesn’t see Education growing in 2015. “One of the biggest hurdles to new construction continues to be state and local budgets,” it writes, adding that there is likely to be “significantly less” state funding for K-12 schools.”
Healthcare should fare a little better, growing by 2% in 2015, and 4% in 2016 to $41 billion. But a “difficult funding environment,” along with changes to construction delivery methods, poses challenges. One trend FMI identifies is toward rebuilding existing facilities using modern hospital design and allow for greater use of technology.
• Manufacturing: After a double-digit gain in 2014, FMI expects manufacturing construction to increase by 17% this year, and then slow to an 8% increase in 2016. It cautions that manufacturing capital construction is highly cyclical when markets reach a state of overcapacity, as some petrochemical products are expected to do in the next few years after a spate of building.
• Amusement/recreation: This section grew by 7% in 2014, and should top that at 9% in 2015. Several major sports stadiums are under construction, and a number of smaller towns and colleges are improving their sports facilities. States also continue to welcome gaming in hopes of increasing their tax bases. A new mixed-use development model combines multiple entertainment venues and shopping into an overall plan.
• Lodging: This sector will be a bright spot, growing by 19% in 2015, and by 12% in 2016, before slowing to 7% in 2019. To buttress its projections, FMI quotes from Lodging Econometrics’ May 2015 reports, which notes that there are 3,885 projects with 488,230 rooms in the construction pipeline, “with the last three quarters posting Year-Over-Year gains of 20% or greater.”
• Office: This sector is benefiting from improving employment levels, and should see 11% growth in 2015, albeit a bit slower than the 19% it hit in 2014.
• Commercial: Capturing what’s going on in retail construction, this sector is expected to grow by 13% to $69 billion this year, but be flat in 2016. “Consumers remain relatively confident about the economy, but they are also remaining conservative in their discretionary spending, at least until wage recovery improves,” FMI writes.
• Religious: What growth there is will likely be in renovation, as new congregations move into vacated retail space or reoccupy church buildings abandoned by other faiths. FMI thinks this sector could be flatlining, and quotes statistics from Pew Research Center that show the percentage of adults (ages 18 and older) who describe themselves as Christians dropping by nearly eight percentage points in just seven years through 2014. Over that same period, the percentage of Americans who are religiously unaffiliated jumped by more than six points, to 22.8%
• Transportation: After registering 5% growth in 2014, transportation is expected to add 7% for 2015 to $44.7 billion. But this sector remains heavily dependent on government support that is never a certainty.
Related Stories
| Jun 30, 2014
4 design concepts that remake the urban farmer's market
The American Institute of Architects held a competition to solve the farmer's markets' biggest design dilemma: lightweight, bland canopies that although convenient, does not protect much from the elements.
| Jun 30, 2014
Harvard releases the State of the Nation’s Housing 2014
Although the housing industry saw notable increases in construction, home prices, and sales in 2013, household growth has yet to fully recover from the effects of the recession, according to a new Harvard University report.
| Jun 30, 2014
OMA's The Interlace honored as one of the world's most 'community-friendly' high-rises
The 1,040-unit apartment complex in Singapore has won the inaugural Urban Habitat award from the Council on Tall Buildings and Urban Habitat, which highlights projects that demonstrate a positive contribution to the surrounding environment.
| Jun 30, 2014
Work starts on Jean Nouvel-designed European Patent Office in the Netherlands [slideshow]
With around 80,000 sm and a budget of €205 million self-financed by the EPO, the complex will be one of the biggest office construction sites ever in the Netherlands.
| Jun 30, 2014
Growth of crowdfunding, public-private partnerships among top trends in architecture marketplace
A new report by the American Institute of Architects highlights several emerging trends in the architecture marketplace, including the growth of the P3 project delivery model and designing for health.
| Jun 30, 2014
Report recommends making infrastructure upgrades a cabinet-level priority
The ASCE estimates that $3.6 trillion must be invested by 2020 to make critically needed upgrades and expansions of national infrastructure—and avoid trillions of dollars in lost business sales, exports, disposable income, and GDP.
| Jun 30, 2014
Gen X, not Baby Boomers, spending the most money on homes [infographic]
It turns out that Generation X, who have the highest incomes of the three generations surveyed, are paying the highest home payments and tend to have the largest households.
| Jun 30, 2014
Zaha Hadid's Iraq Parliament complex design marred with controversy
Zaha Hadid's design for the Iraq Parliament was selected, despite placing third in the original RIBA-organized competition.
| Jun 26, 2014
Plans for Britain’s newest landmark brings in international cooperation
Designers of the London Eye will team up with companies from France, the Netherlands and the United States to construct i360 Brighton, the U.K.'s newest observation tower.
| Jun 25, 2014
The best tall buildings of 2014
Four high-rise buildings from multiple continents have been selected as the best of their region. The best worldwide tall building will be announced November 6.
