Following a 19.7% surge in spending for commercial, institutional, and industrial buildings in 2023, leading construction industry economists expect spending growth to come back to earth in 2024, according to the July 2023 AIA Consensus Construction Forecast Panel.
The twice-yearly Consensus Construction report aggregates building construction spending forecasts from nine leading economists:
- Richard Branch, Dodge Construction Network
- Scott Hazelton, S&P Global
- Steven Shields, Moody's Analytics
- Brian Strawberry, FMI
- Alex Carrick, ConstructConnect
- Anirban Basu, Associated Builders and Contractors
- Charles Dougherty, Wells Fargo Securities
- Bernard Markstein, Markstein Advisors
- Mark Vitner, Piedmont Crescent Capital
All nine economists are in agreement on a 2024 spending-growth slowdown. Two economists are calling for a contraction in spending (Wells Fargo, -1.0%; Piedmont Crescent Capital, -4.7%). ABC's Anirban Basu is the most bullish on 2024, predicting a 7.7% increase in overall building spending.
"The first half of this year has seen gains in construction spending on nonresidential buildings approaching 20%. However, this scorching growth rate is expected to moderate a bit moving into the third and fourth quarters," wrote AIA Chief Economist Kermit Baker, Hon. AIA, in the report. "Even with the easing in supply chain issues and the improved pricing of many construction materials and products, elevated interest rates, more restrictive lending on the part of banks, nervousness over the direction of the economy, and construction labor constraints are expected to slow the pace of growth."
Bright spots for the remainder of 2023 and 2024 include:
- Healthcare, driven by the aging baby boom population
- Manufacturing/distribution, thanks to the post-Covid reshoring of production resulting from supply chain issues during the pandemic
- Hotels, with leisure travel returning to normal following the pandemic
- Education, as school districts and higher education institutions play catch-up on projects in the wake of Covid.
"There are emerging concerns that outsourcing the manufacturing of high-tech products leaves our economy and national defense more vulnerable," Baker wrote. "The $280 billion in funding provided by the 2022 federal CHIPS and Science Act is designed to advance domestic research and manufacturing of semiconductors in the United States. These funds will boost spending for these facilities for much of the coming decade."
View the full AIA Consensus Construction Forecast Panel report, including an interactive table with market forecasts from all nine economists.
Related Stories
Market Data | Feb 14, 2019
U.S. Green Building Council announces top 10 countries and regions for LEED green building
The list ranks countries and regions in terms of cumulative LEED-certified gross square meters as of December 31, 2018.
Market Data | Feb 13, 2019
Increasingly tech-enabled construction industry powers forward despite volatility
Construction industry momentum to carry through first half of 2019.
Market Data | Feb 4, 2019
U.S. Green Building Council announces annual Top 10 States for LEED Green Building in 2018
Illinois takes the top spot as USGBC defines the next generation of green building with LEED v4.1.
Market Data | Feb 4, 2019
Nonresidential construction spending dips in November
Total nonresidential spending stood at $751.5 billion on a seasonally adjusted annualized rate.
Market Data | Feb 1, 2019
The year-end U.S. hotel construction pipeline continues steady growth trend
Project counts in the early planning stage continue to rise reaching an all-time high of 1,723 projects/199,326 rooms.
Market Data | Feb 1, 2019
Construction spending is projected to increase by more than 11% through 2022
FMI’s annual outlook also expects the industry’s frantic M&A activity to be leavened by caution going forward.
Market Data | Jan 23, 2019
Architecture billings slow, but close 2018 with growing demand
AIA’s Architecture Billings Index (ABI) score for December was 50.4 compared to 54.7 in November.
Market Data | Jan 16, 2019
AIA 2019 Consensus Forecast: Nonresidential construction spending to rise 4.4%
The education, public safety, and office sectors will lead the growth areas this year, but AIA's Kermit Baker offers a cautious outlook for 2020.
Market Data | Dec 19, 2018
Brokers look forward to a commercial real estate market that mirrors 2018’s solid results
Respondents to a recent Transwestern poll expect flat to modest growth for rents and investment in offices, MOBs, and industrial buildings.
Market Data | Dec 19, 2018
When it comes to economic clout, New York will far outpace other U.S. metros for decades to come
But San Jose, Calif., is expected to have the best annual growth rate through 2035, according to Oxford Economics’ latest Global Cities report.