Pent-up demand from the pandemic is creating a general spending surge that is helping to improve the outlook on construction spending over the next two years, according to a new report from the American Institute of Architects (AIA).
After nonresidential construction spending declined by about 2% last year, the AIA Consensus Construction Forecast Panel, in its mid-year update, is projecting that spending will decline an additional 3.9% this year, which is an improvement from the forecasted 5.7% decline reported in January. Nonresidential construction spending is expected to increase 4.6% in 2022.
The strongest design sector performers for the remainder of this year are expected to be health care facilities, up 1.4%, while a few other sectors should see only minimal declines, like retail, religious, and education. However, in 2022, virtually all the nonresidential building sectors are expected to see healthy growth, paced by lodging, as well as amusement and recreation, both of which saw steep declines during the pandemic.
“Even while momentum is developing behind most of the nonresidential building sectors, there are several potential potholes on the road to a construction recovery,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Inflation is back on the radar screen given the surge in consumer spending, as well as the growing federal debt levels. Also, the global supply chain continues to face serious challenges that persist even well after initial pandemic related disruptions have largely subsided.”
Related Stories
Market Data | Jan 13, 2021
Atlanta, Dallas seen as most favorable U.S. markets for commercial development in 2021, CBRE analysis finds
U.S. construction activity is expected to bounce back in 2021, after a slowdown in 2020 due to challenges brought by COVID-19.
Market Data | Jan 13, 2021
Nonres construction could be in for a long recovery period
Rider Levett Bucknall’s latest cost report singles out unemployment and infrastructure spending as barometers.
Market Data | Jan 13, 2021
Contractor optimism improves as ABC’s Construction Backlog inches up in December
ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels increased in December.
Market Data | Jan 11, 2021
Turner Construction Company launches SourceBlue Brand
SourceBlue draws upon 20 years of supply chain management experience in the construction industry.
Market Data | Jan 8, 2021
Construction sector adds 51,000 jobs in December
Gains are likely temporary as new industry survey finds widespread pessimism for 2021.
Market Data | Jan 7, 2021
Few construction firms will add workers in 2021 as industry struggles with declining demand, growing number of project delays and cancellations
New industry outlook finds most contractors expect demand for many categories of construction to decline.
Market Data | Jan 5, 2021
Barely one-third of metros add construction jobs in latest 12 months
Dwindling list of project starts forces contractors to lay off workers.
Market Data | Jan 4, 2021
Nonresidential construction spending shrinks further in November
Many commercial projects languish, even while homebuilding soars.
Market Data | Dec 29, 2020
Multifamily transactions drop sharply in 2020, according to special report from Yardi Matrix
Sales completions at end of Q3 were down over 41 percent from the same period a year ago.
Market Data | Dec 28, 2020
New coronavirus recovery measure will provide some needed relief for contractors coping with project cancellations, falling demand
Measure’s modest amount of funding for infrastructure projects and clarification that PPP loans may not be taxed will help offset some of the challenges facing the construction industry.