Manufacturing and lodging continue to lead the charge in the construction sector, which is expected to grow by 6% in 2015, according to the latest forecasts by FMI, the investment consulting and banking firm. That’s a percentage point higher than the growth FMI projected three months ago.
FMI also expects construction activity to increase by 7% in 2016, and reach $1.09 trillion, the highest level since 2008. Nonresidential construction in place should hit $423.96 billion this year, representing a 9% gain, and keep growing by 7% to $452.25 billion in 2016. For the most part, the biggest sectors of nonresidential construction are expected to thrive through next year.
Here are some of the report’s highlights:
• Manufacturing has been the “rock star” of nonresidential building, says FMI. Construction activity in this sector should be up 18% to $68.2 billion this year. “Manufacturing capacity utilization rates [were] at 77.7% of capacity in July 2015, which is near the historical average.” However, FMI expects this sector to slow next year, when construction growth is projected to increase by just 5% to $71.9 billion. “One concern, like much of the construction industry, is the lack of trained personnel needed to keep up with growing backlogs.”
• Lodging construction continues to be strong. FMI forecasts 15% growth this year to $18.5 billion, and 12% in 2016 to $20.8 billion. To bolster its predictions, FMI quotes a May 2015 report from Lodging Econometrics that estimates 3,885 projects and 488,230 rooms currently under construction. “The greatest amount of growth will continue to be upscale properties and event locations,” FMI states;
• Office construction has slowed a bit from its gains in 2014. But FMI still expects office construction to be up by 14% to $52.6 billion this year, and by 7% to $56.3 billion in 2016. The National Association of Realtors predicts that office vacancies would drop below 15% by year’s end. And JLI noted recently that more than 40% of all office leases 20,000 sf or larger are exhibiting growth;
• Healthcare construction is on a path to return to “historical growth rates” over the next four years. That would mean a 5% increase to $40.4 billion this year, and a 10% gain to $41.9 billion next year. FMI points out, though, that “the changing nature of health care and insurance” continues to make investors nervous. Renovation and expansion will account for the lion’s share of construction projects going forward;
• The Educational sector “is growing again,” albeit modestly, says FMI. Construction in place should increase by 3% to $82.3 billion this year, and then bump up by 10% to $85.8 billion in 2016. FMI notes that K-12 construction is getting less funding from states, even as enrollment is expected to expand by 2.5 million over the next four years.
• Commercial construction—which is essentially the retail and food segments—should be up 8% to $67.7 billion in 2015, and grow by another 10% to $74.4 billion, next year. FMI quotes Commerce Department estimates that food services and drinking places were up in July by 9% over the same month in 2014, and non-store retail rose by 5.2%.
• Amusements and recreation-related construction was up 9% last year, and is expected to increase to 11% to $18.5 billion in 2015, and by 8% next year, when it should hit nearly $20 billion. FMI anticipates ongoing municipal demand for sports venues, which are seen as “job creators.”
• The slowdown of multifamily construction may have to wait another year. FMI expects construction of buildings with five or more residential units to increase by 11% in 2015, and by 12% next year to $63.1 billion.
Related Stories
| May 7, 2013
First look: Golden State Warriors stadium by Snøhetta, AECOM
Architects Snøhetta and AECOM have revealed their latest renderings of a new stadium for NBA basketball team the Golden State Warriors on the waterfront in San Francisco.
| May 7, 2013
Renovated bridge building will anchor Nashville riverfront master plan
Renovations to the former Nashville Bridge Company building were recently completed, including a newly-built modern wing. The facility has been re-dubbed The Bridge Building and now offers spaces for meetings, parties, weddings, and other events.
| May 7, 2013
First look: Adrian Smith + Gordon Gill skyscraper designed to 'confuse the wind'
The 400-meter-high, 116-story Imperial Tower in Mumbai will feature a slender, rounded form optimized to withstand the area's strong wind currents.
| May 6, 2013
SAFTI FIRST announces 3D Autodesk Revit models for fire rated wall, window, and door systems
SAFTI FIRST, leading USA-manufacturer of fire rated glass and faming systems, is proud to announce that Autodesk Revit models are now available for its fire rated walls, window and door systems via www.safti.com and Autodesk Seek.
| May 6, 2013
7 major multifamily residential projects in the works
A $140 million redevelopment of a landmark, 45-building apartment complex in Los Angeles is among the nation's significant multifamily developments under way.
| May 3, 2013
5 common failures in paints and coatings
As experienced designers, contractors, and owners know, most paint and coating problems are correctable, but some are especially stubborn to address. Here is a partial compendium of typical failure modes and methods for addressing the problem.
| May 3, 2013
'LEED for all GSA buildings,' says GSA Green Building Advisory Committee
The Green Building Advisory Committee established by the General Services Administration, officially recommended to GSA that the LEED green building certification system be used for all GSA buildings as the best measure of building efficiency.
| May 3, 2013
SMPS Foundation accepting applications for Ron Garikes Student Scholarship
The SMPS Foundation is now accepting scholarship applications from eligible students majoring in marketing, communications, or public relations who are planning a career in professional services marketing in the architecture, engineering, and construction industry.