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
| Feb 11, 2011
Iowa surgery center addresses both inpatient and outpatient care
The 12,000-person community of Carroll, Iowa, has a new $28 million surgery center to provide both inpatient and outpatient care. Minneapolis-based healthcare design firm Horty Elving headed up the four-story, 120,000-sf project for St. Anthony’s Regional Hospital. The center’s layout is based on a circular process flow, and includes four 800-sf operating rooms with poured rubber floors to reduce leg fatigue for surgeons and support staff, two substerile rooms between each pair of operating rooms, and two endoscopy rooms adjacent to the outpatient prep and recovery rooms. Recovery rooms are clustered in groups of four. The large family lounge (left) has expansive windows with views of the countryside, and television monitors that display coded information on patient status so loved ones can follow a patient’s progress.
| Feb 11, 2011
Grocery store anchors shopping center in Miami arts/entertainment district
18Biscayne is a 57,200-sf urban retail center being developed in downtown Miami by commercial real estate firm Stiles. Construction on the three-story center is being fast-tracked for completion in early 2012. The project is anchored by a 49,200-sf Publix market with bakery, pharmacy, and café with outdoor seating. An additional 8,000 sf of retail space will front Biscayne Boulevard. The complex is in close proximity to the Adrienne Arsht Center for the Performing Arts, the downtown Miami entertainment district, and the Omni neighborhood, one of the city’s fast-growing residential areas.
| Feb 11, 2011
Chicago architecture firm planning one of China’s tallest towers
Chicago-based Goettsch Partners was commissioned by developer Guangzhou R&F Properties Co. Ltd. to design a new 294,570-sm mixed-use tower in Tianjin, China. The Tianjin R&F Guangdong Tower will be located within the city’s newly planned business district, and at 439 meters it will be one of China’s tallest buildings. The massive complex will feature 134,900 sm of Class A office space, a 400-key, five-star hotel, 55 condominiums, and 8,550 sm of retail space. The architects are designing the tower with multi-story atriums and a high-performance curtain wall to bring daylight deep into the building, thereby creating deeper lease spans. The project is currently finishing design.
| Feb 11, 2011
Two projects seek to reinvigorate Los Angeles County medical center
HMC Architects designed two new buildings for the Los Angeles County Martin Luther King, Jr., Medical Center as part of a $360 million plan to reinvigorate the campus. The buildings include a 120-bed hospital, which involves renovation of an existing tower and several support buildings, and the construction of a new multi-service ambulatory care center. The new facilities will have large expanses of glass at all waiting and public areas for unobstructed views of downtown Los Angeles. A curved glass entrance canopy will unite the two buildings. When both projects are completed—the hospital in 2012 and the ambulatory care center in 2013—the campus will have added more than 460,000 sf of space. The hospital will seek LEED certification, while the ambulatory care center is targeting LEED Silver.
| Feb 11, 2011
Sustainable community center to serve Angelinos in need
Harbor Interfaith Services, a nonprofit serving the homeless and working poor in the Harbor Area and South Bay communities of Los Angeles, engaged Withee Malcolm Architects to design a new 15,000-sf family resource center. The architects, who are working pro bono for the initial phase, created a family-centered design that consolidates all programs into a single building. The new three-story space will house a resource center, food pantry, nursery and pre-school, and administrative offices, plus indoor and outdoor play spaces and underground parking. The building’s scale and setbacks will help it blend with its residential neighbors, while its low-flow fixtures, low-VOC and recycled materials, and energy-efficient mechanical equipment and appliances will help it earn LEED certification.
| Feb 11, 2011
Texas megachurch inspired by yesteryear’s materials, today’s design vocabulary
The third phase of The First Baptist Church of Pasadena, Texas, involves construction of a new 115,000-sf worship center addition. Currently in design by Zeigler Cooper, the project will include a 2,500-seat worship center (with circular layout and space for a 50-person orchestra and 200-person choir), a 500-seat chapel (for weddings, funerals, and special events), and a prayer room. The addition will connect to the existing church and create a Christian Commons for education, administration, music, and fellowship. The church asked for a modern design that uses traditional materials, such as stone, brick, and stained glass. Construction is scheduled to begin this summer.
| Feb 11, 2011
Apartment complex caters to University of Minnesota students
Twin Cities firm Elness Swenson Graham Architects designed the new Stadium Village Flats, in the University of Minnesota’s East Bank Campus, with students in mind. The $30 million, six-story residential/retail complex will include 120 furnished apartments with fitness rooms and lounges on each floor. More than 5,000 sf of first-floor retail space and two levels of below-ground parking will complete the complex. Opus AE Group Inc., based in Minneapolis, will provide structural engineering services.
| Feb 11, 2011
Four-story library at Salem State will hold half a million—get this—books!
Salem State University in Massachusetts broke ground on a new library and learning center in December. The new four-story library will include instructional labs, group study rooms, and a testing center. The modern, 124,000-sf design by Boston-based Shepley Bulfinch includes space for 500,000 books and study space for up to a thousand students. Sustainable features include geothermal heating and cooling, rainwater harvesting, and low-flow plumbing fixtures.
| Feb 11, 2011
Green design, white snow at Egyptian desert retail complex
The Mall of Egypt will be a 135,000-sm retail and entertainment complex in Cairo’s modern 6th of October district. The two-story center is divided into three themed zones—The City, which is arranged as a series of streets lined with retail and public spaces; The Desert Valley, which contains upscale department stores, international retailers, and a central courtyard for music and other cultural events; and The Crystal, which will include leisure and entertainment venues, including a cinema and indoor snow park. RTKL is designing the massive complex to LEED Silver standards.
| Feb 10, 2011
7 Things to Know About Impact Glazing and Fire-rated Glass
Back-to-basics answers to seven common questions about impact glazing and fire-rated glass.
