Due to the weather-related slow start in the nonresidential building market during the first part of the year, and the prolonged weakness in the institutional sector, construction spending projections for the rest of the year have been lowered slightly.
The commercial construction sector is still looking at solid spending increases throughout the remainder of 2014, paced by high levels of demand for hotels and office buildings. The American Institute of Architects’ (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, is projecting that spending will see a 4.9% increase in 2014 – down from the previous estimate of 5.8%, with next year’s projection holding at 8%.
VIDEO: AIA Chief Economist discusses economic trends for 3rd quarter of 2014
“The institutional market has been a drag on the overall recovery for the design and construction industry for the last few years, and until we see state and local governments ramp up spending for new education, healthcare and public safety structures there likely won’t be a widespread acceleration in spending for the entire industry,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But we continue to have an optimistic outlook for the commercial and industrial sectors both for the rest of this year and into 2015.”
Market Segment Consensus Growth Forecasts |
2014 |
2015 |
|
|
|
Overall nonresidential building |
4.9% |
8.0% |
|
|
|
Commercial / industrial |
9.9% |
11.2% |
Hotels |
14.5% |
9.2% |
Office buildings |
12.8% |
13.3% |
Industrial facilities |
7.6% |
9.2% |
Retail |
7.4% |
10.4% |
|
|
|
Institutional |
-0.1% |
5.8% |
Amusement / recreation |
3.7% |
6.6% |
Education |
-0.1% |
5.7% |
Healthcare facilities |
-1.8% |
6.6% |
Religious |
-4.1% |
0.7% |
Public safety |
-4.2% |
3.3% |
Baker continued, “While there does not appear to be any structural frailties in the overall economy that could possibly derail increasing levels of construction spending over the next 18 months, lending standards at financial institutions continue to fall well short of the increasing demand for commercial real estate loans, which is another factor that serves as a wild card and a source of concern for the entire industry.”
About the AIA Consensus Construction Forecast Panel
The AIA Consensus Construction Forecast Panel is conducted twice a year with the leading nonresidential construction forecasters in the United States including, McGraw Hill Construction, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, Reed Business Information, Associated Builders & Contractors and FMI. The purpose of the Consensus Construction Forecast Panel is to project business conditions in the construction industry over the coming 12 to 18 months. The Consensus Construction Forecast Panel has been conducted for 15 years.
About The American Institute of Architects
Founded in 1857, members of the American Institute of Architects consistently work to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public well being. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders, and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.
Related Stories
Urban Planning | May 25, 2023
4 considerations for increasing biodiversity in construction projects
As climate change is linked with biodiversity depletion, fostering biodiverse landscapes during construction can create benefits beyond the immediate surroundings of the project.
K-12 Schools | May 25, 2023
From net zero to net positive in K-12 schools
Perkins Eastman’s pursuit of healthy, net positive schools goes beyond environmental health; it targets all who work, teach, and learn inside them.
Contractors | May 24, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of April 2023
Contractor backlogs climbed slightly in April, from a seven-month low the previous month, according to Associated Builders and Contractors.
Mass Timber | May 23, 2023
Luxury farm resort uses CLT framing and geothermal system to boost sustainability
Construction was recently completed on a 325-acre luxury farm resort in Franklin, Tenn., that is dedicated to agricultural innovation and sustainable, productive land use. With sustainability a key goal, The Inn and Spa at Southall was built with cross-laminated and heavy timber, and a geothermal variant refrigerant flow (VRF) heating and cooling system.
Architects | May 23, 2023
DEI initiatives at KAI Enterprises, with Michael Kennedy, Jr. and Gyasi Haynes
Michael Kennedy, Jr. and Gyasi Haynes of KAI Enterprises, St. Louis, describe their firm's effort to create a culture of diversity, equity, and inclusion—and how their own experiences as black men in the design and construction industry shaped that initiative.
Multifamily Housing | May 23, 2023
One out of three office buildings in largest U.S. cities are suitable for residential conversion
Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.
Architects | May 23, 2023
Ware Malcomb hires Francisco Perez-Azua as Director, Interior Architecture & Design, in its Miami office
Ware Malcomb hires Francisco Perez-Azua as Director, Interior Architecture & Design, in its Miami office.
K-12 Schools | May 22, 2023
The revival of single-building K-12 schools
Schools that combine grades PK through 12 are suddenly not so uncommon. Education sector experts explain why.
Architects | May 19, 2023
Snøhetta architects make a bid to unionize the firm's New York studio
Employees at the New York office of architecture firm Snøhetta have filed a petition with the National Labor Relations Board (NLRB) to unionize the studio. Snøhetta employees’ action marks the third time architects at a private-sector architecture studio in the U.S. took that step.
Healthcare Facilities | May 19, 2023
A new behavioral health facility in California targets net zero energy
Shortly before Mental Health Awareness Month in May, development and construction firm Skanska announced the topping out of California’s first behavioral health facility—and the largest in the nation—to target net zero energy. Located in Redwood City, San Mateo County, Calif., the 77,610-sf Cordilleras Health System Replacement Project is slated for completion in late 2024.