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
Industry Research | Aug 11, 2017
NCARB releases latest data on architectural education, licensure, and diversity
On average, becoming an architect takes 12.5 years—from the time a student enrolls in school to the moment they receive a license.
Market Data | Aug 4, 2017
U.S. grand total construction starts growth projection revised slightly downward
ConstructConnect’s quarterly report shows courthouses and sports stadiums to end 2017 with a flourish.
Market Data | Aug 2, 2017
Nonresidential Construction Spending falls in June, driven by public sector
June’s weak construction spending report can be largely attributed to the public sector.
Market Data | Jul 31, 2017
U.S. economic growth accelerates in second quarter; Nonresidential fixed investment maintains momentum
Nonresidential fixed investment, a category of GDP embodying nonresidential construction activity, expanded at a 5.2% seasonally adjusted annual rate.
Multifamily Housing | Jul 27, 2017
Apartment market index: Business conditions soften, but still solid
Despite some softness at the high end of the apartment market, demand for apartments will continue to be substantial for years to come, according to the National Multifamily Housing Council.
Market Data | Jul 25, 2017
What's your employer value proposition?
Hiring and retaining talent is one of the top challenges faced by most professional services firms.
Market Data | Jul 25, 2017
Moderating economic growth triggers construction forecast downgrade for 2017 and 2018
Prospects for the construction industry have weakened with developments over the first half of the year.
Industry Research | Jul 6, 2017
The four types of strategic real estate amenities
From swimming pools to pirate ships, amenities (even crazy ones) aren’t just perks, but assets to enhance performance.
Market Data | Jun 29, 2017
Silicon Valley, Long Island among the priciest places for office fitouts
Coming out on top as the most expensive market to build out an office is Silicon Valley, Calif., with an out-of-pocket cost of $199.22.
Market Data | Jun 26, 2017
Construction disputes were slightly less contentious last year
But poorly written and administered contracts are still problems, says latest Arcadis report.
