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
| Jun 5, 2012
Cannon Design joins forces with Peter Ellis New Cities
Peter Ellis will now lead Cannon Design's urban planning and city design practice in collaboration with the firm's executive leadership.
| Jun 5, 2012
Walker Parking opens office in Abu Dhabi
Walker has been in Abu Dhabi since May 2011 but in a temporary office suite.
| Jun 5, 2012
Glumac hires Drit Shoemaker as new director of business development
Shoemaker will research, connect, and forge new client relationships with architects, developers, owners and brokers while strengthening relationships with current clients.
| Jun 5, 2012
Hoffman Architects Arbuckle elected president of New York/Tri-State DOCOMOMO
As chapter president, Arbuckle will guide and oversee the organization's efforts on behalf of Modern buildings and sites, and he will act as the main spokesperson for the organization.
| Jun 4, 2012
Brownfield goes green
Chicago Center for Green Technology uses high-speed, energy-efficient hand dryers to share its green message and earn LEED credits.
| Jun 4, 2012
KBE Building and CTA Construction awarded Project of the Year from CMAA
Award given for work done on the renovation of Beverly High School in Beverly, Mass.
| Jun 4, 2012
Pressley promoted to Senior VP and CIO at Hill International
Pressley will be responsible for managing all of Hill's information technology systems and software worldwide.
| Jun 4, 2012
Stalco Construction promotes Scott Pavick to chief estimator
Pavick manages the estimating department and is responsible for developing cost estimates and budgets, value engineering, and subcontractor bid evaluation and negotiations.
| Jun 4, 2012
HBD Construction to build new training campus in St. Louis
Larger campus facility will expand training opportunities for plumbers and pipefitters.
| Jun 1, 2012
New BD+C University Course on Insulated Metal Panels available
By completing this course, you earn 1.0 HSW/SD AIA Learning Units.