The AEC industry is heading into 2010 in better shape than was the case a year ago, according to the 2010 AEC Industry Outlook: Strategy and Insight for Design & Construction Firms, a new forecast released by ZweigWhite this month.
A significant turnaround for the commercial market isn't anticipated until 2011, but a modest pickup is expected in late 2010. Some sectors are faring better than others—and will continue to do so. Markets to watch for 2010: healthcare, education, and mixed-use.
Following is an overview of the major commercial AEC markets, based on the ZweigWhite report.
Three sectors showing growth
Healthcare. This sector's growth over the past few years is expected to continue for 2010 and beyond. Although some slowing is expected, healthcare is still considered the hottest market for AEC firms. Behind the market's growth: rising numbers of outpatient procedures, aging population, declining hospital infrastructure, consolidation of healthcare systems, BIM and other technologies, sustainable design, and security and disaster preparedness.
The value of healthcare construction to be put in place for 2010 will reach $48.5 billion, an increase of 1.2% from 2009 levels.
Education. Education is one of the largest sectors for AEC firms, and it's growing, making K-12 and higher education markets two of the industry's best prospects. The markets aren't expected to slow significantly, but they took big hits in 2008 and 2009 and are not immune to the downturn.
For 2010, the education sector outlook is mixed, with high school construction looking strong and college and university construction to continue apace to meet projected enrollment increases through 2017. Project work is also expected to be mixed—some new construction and some expansions and renovations to existing facilities.
Overall, the value of all school construction to be put in place for 2010 will top $99.5 billion.
Mixed-use. Another bright spot in the industry. Mixed-use projects are gaining in popularity because the building type ties into New Urbanist principals, creates more livable communities, and is being used as a catalyst for city redevelopment.
Construction spending on mixed-use projects is not tracked, so predictions for 2010 are unavailable. Mixed-use projects, however, aren't immune to a slow economy because many incorporate components from markets that are down, such as lodging and retail.
The rest of the story
Lodging. One of the hardest-hit commercial sectors, lodging is expected to continue its sluggish pace in 2010. The decline, however, is viewed as cyclical, and a recovery is anticipated for 2011.
The value of lodging construction to be put in place for 2010 will reach $20.1 billion, a decrease of 12.8% from 2009 levels.
Manufacturing. Construction of manufacturing and industrial facilities also slowed significantly because of the recession, and 2010 is expected to be another down year. Rents are expected to decline through 2010. Market recovery isn't expected until 2011, and then is expected to be slow.
The value of manufacturing construction to be put in place for 2010 will reach $59.6 billion, a decrease of 19% from 2009 levels.
Multifamily. This sector was hit hard by the recession, and a slow 2010 is expected, with some growth anticipated in 2011. Multifamily starts are notoriously volatile, but they are expected to reach 126,000 for 2010, down from 130,000 in 2009. Looking ahead to 2011, multifamily starts are expected to average 150,000.
Office buildings. With so many layoffs, the nation's reduced workforce is the biggest drag on the office sector. An improving economy signals a turnaround—although the rebound will happen slowly and cautiously. Vacancy rates are expected to remain high during 2010 and then start to decrease in 2011.
The value of office construction to be put in place for 2010 will reach $46.6 billion, a decrease of 13.5% from 2009 levels.
The ZweigWhite 2010 AEC Industry Outlook (214-page PDF, $295; free Executive Summary) may be ordered at: http://www.zweigwhite.com/p-858-2010-aec-industry-outlook-strategy-and-insight-for-design-construction-firms.php?mtn=F3658E
Related Stories
| Jan 4, 2011
Furniture Sustainability Standard - Approved by ANSI and Released for Distribution
BIFMA International recently announced formal American National Standards Institute (ANSI) approval and release of the ANSI/BIFMA e3-2010 Furniture Sustainability Standard. The e3 standard represents a structured methodology to evaluate the "sustainable" attributes of furniture products and constitutes the technical criteria of the level product certification program.
| Dec 7, 2010
Product of the Week: Petersen Aluminum’s column covers used in IBM’S new offices
IBM’s new offices at Dulles Station West in Herndon, Va., utilized Petersen’s PAC-1000 F Flush Series column covers. The columns are within the office’s Mobility Area, which is designed for a mobile workforce looking for quick in-and-out work space. The majority of workspaces in the office are unassigned and intended to be used on a temporary basis.
| Nov 2, 2010
A Look Back at the Navy’s First LEED Gold
Building Design+Construction takes a retrospective tour of a pace-setting LEED project.
| Nov 2, 2010
Wind Power, Windy City-style
Building-integrated wind turbines lend a futuristic look to a parking structure in Chicago’s trendy River North neighborhood. Only time will tell how much power the wind devices will generate.
| Oct 13, 2010
Test run on the HP Z200 SFF Good Value in a Small Package
Contributing Editor Jeff Yoders tests a new small-form factor, workstation-class desktop in Hewlett-Packard’s line that combines performance of its minitower machine with a smaller chassis and a lower price.
| Oct 13, 2010
Prefab Trailblazer
The $137 million, 12-story, 500,000-sf Miami Valley Hospital cardiac center, Dayton, Ohio, is the first major hospital project in the U.S. to have made extensive use of prefabricated components in its design and construction.
| Oct 13, 2010
Hospital tower gets modern makeover
The Wellmont Holston Valley Medical Center in Kingsport, Tenn., expanded its D unit, a project that includes a 243,443-sf addition with a 12-room operating suite, a 36-bed intensive care unit, and an enlarged emergency department.
| Oct 13, 2010
HQ renovations aim for modern look
Gerner Kronick + Valcarcel Architects’ renovations to the Commonwealth Bank of Australia’s New York City headquarters will feature a reworked reception lobby with back-painted glass, silk-screened logos, and a video wall.
| Oct 13, 2010
Community center under way in NYC seeks LEED Platinum
A curving, 550-foot-long glass arcade dubbed the “Wall of Light” is the standout architectural and sustainable feature of the Battery Park City Community Center, a 60,000-sf complex located in a two-tower residential Lower Manhattan complex. Hanrahan Meyers Architects designed the glass arcade to act as a passive energy system, bringing natural light into all interior spaces.
| Oct 13, 2010
Community college plans new campus building
Construction is moving along on Hudson County Community College’s North Hudson Campus Center in Union City, N.J. The seven-story, 92,000-sf building will be the first higher education facility in the city.