Nonresidential Construction Recovery Possible by Latter Part of 2011

Sharp declines projected for the rest of 2010.

July 14, 2010

Even with modest improvements in the overall U.S. economy, nonresidential construction spending is expected to decrease by more than 20% in 2010 with a marginal increase of 3.1% in 2011 in inflation adjusted terms. Poor conditions remain because of an oversupply of nonresidential facilities in most construction categories, weak demand for space, continuing declines in commercial property values, and a strong reluctance to provide credit from real estate lenders. These are highlights from the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters. 

“There are a number of factors at play here that are contributing to one of the steepest construction downturns in generations,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “We have businesses nervous about expanding their facilities, a fragile financial sector, excess commercial space, and general unease in the international economy. Things should begin to turn around midway through next year with retail and hotels expected to see the strongest growth, along with health care and amusement and recreation facilities.”

Market Segment Consensus Growth Forecasts  

2010

2011

 

 

 

Overall nonresidential 

-20.3%                 

3.1%

 

 

 

Commercial / industrial

 

 

Hotels

-43.3%                 

8.7%

Office buildings

-29.1%                 

0.0%

Retail

-25.6%                 

7.6%

Industrial

-21.3                     

-2.0%

 

 

 

Institutional

 

 

Amusement / recreation

-14.4%                 

8.1%

Education

-13.2%                 

1.3%

Religious

-10.2%                

0.0%

Public safety

-9.1%                    

-0.7%

Health care facilities

-6.5%                    

5.1%