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
| Aug 11, 2010
Construction employment shrinks in 319 of the nation's 336 largest metro areas in July, continuing months-long slide
Construction workers in communities across the country continued to suffer extreme job losses this July according to a new analysis of metropolitan area employment data from the Bureau of Labor Statistics released today by the Associated General Contractors of America. That analysis found construction employment declined in 319 of the nation’s largest communities while only 11 areas saw increases and six saw no change in construction employment between July 2008 and July 2009.
| Aug 11, 2010
Green consultant guarantees LEED certification or your money back
With cities mandating LEED (Leadership in Energy and Environmental Design) certification for public, and even private, buildings in growing numbers, an Atlanta-based sustainability consulting firm is hoping to ease anxieties over meeting those goals with the industry’s first Green Guaranteed.
| Aug 11, 2010
Architecture Billings Index bounces back after substantial dip
Exhibiting a welcome rebound following a 5-point dip the month prior, the Architecture Billings Index (ABI) was up almost 6 points in July. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI rating was 43.1, up noticeably from 37.7 the previous month.
| Aug 11, 2010
Rafael Vinoly-designed East Wing opens at Cleveland Museum of Art
Rafael Vinoly Architects has designed the new East Wing at the Cleveland Museum of Art (CMA), Ohio, which opened to the public on June 27, 2009. Its completion marks the opening of the first of three planned wings.
| Aug 11, 2010
National Association of Governors adopts AIA policy of reaching carbon neutrality in buildings by 2030
As part of their comprehensive national Energy Conservation and Improved Energy Efficiency policy, the National Association of Governors (NGA) has adopted the promotion of carbon neutral new and renovated buildings by 2030 as outlined by the American Institute of Architects (AIA).
| Aug 11, 2010
Installation work begins on Minnesota's largest green roof
Installation of the 2.5 acre green roof vegetation on the City-owned Target Center begins today. Over the course of two days a 165 ton crane will hoist five truckloads of plant material, which includes 900 rolls of pre-grown vegetated mats of sedum and native plants for installation on top of the arena's main roof.
| Aug 11, 2010
AASHE releases annual review of sustainability in higher education
The Association for the Advancement of Sustainability in Higher Education (AASHE) has announced the release of AASHE Digest 2008, which documents the continued rapid growth of campus sustainability in the U.S. and Canada. The 356-page report, available as a free download on the AASHE website, includes over 1,350 stories that appeared in the weekly AASHE Bulletin last year.
| Aug 11, 2010
AECOM, Arup, Gensler most active in commercial building design, according to BD+C's Giants 300 report
A ranking of the Top 100 Commercial Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
AIA approves Sika Sarnafil’s continuing education courses offering sustainable design credits
Two continuing education courses offered by Sika Sarnafil have been approved by the American Institute of Architects (AIA) and are now certified to fulfill the AIA’s new Sustainable Design continuing education requirements.