AIA Projects Significant Downturn in Nonresidential Construction Activity Through 2010
Nonresidential construction spending is expected to decrease by 16 percent in 2009 and drop by another almost 12 percent in 2010 in inflation adjusted terms a sign that the troubled real estate sector continues to suffer along with the rest of the economy, according to a new forecast from the American Institute of Architects (AIA).
Nonresidential construction spending is expected to decrease by 16 percent in 2009 and drop by another almost 12 percent in 2010 in inflation adjusted terms a sign that the troubled real estate sector continues to suffer along with the rest of the economy, according to a new forecast from the American Institute of Architects (AIA).
According to AIA's semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, commercial projects will see the most significant decrease in activity. In contrast, most institutional building categories are expected to see much more modest declines over this period.
“While there are some indications that the overall economy is beginning to recover, nonresidential construction activity typically lags behind the rest of the economy,” says AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Commercial facilities such as hotels, retail establishments and offices will feel the decline most dramatically. The institutional market will fare much better as stimulus funding becomes available for education, healthcare and government facilities.”
Market Segment Consensus Growth Forecasts:
Commercial / industrial 2009 2010
Retail -28 percent -12.6 percent
Hotels -25.8 percent -16.8 percent
Office buildings -21.5 percent -17.3 percent
Industrial facilities -0.8 percent -28.4 percent
Institutional 2009 2010
Amusement / recreation -20.8 percent -8.1 percent
Religious -10.7 percent -6.9 percent
Education -8.2 percent -0.7 percent
Health care facilities -1.5 percent -0.8 percent
Public safety 1.7 percent -0.7 percent
“This nonresidential downturn is shaping up to be the deepest decline in nonresidential activity in over a generation.” Baker added. “However, we’re beginning to see some moderation in the trends in design billings at architecture firms, so we hopefully are nearing the bottom of this cycle.”
About the AIA Consensus Construction Forecast Panel
The AIA Consensus Construction Forecast Panel is conducted twice a year with nonresidential construction forecasters in the United States including, McGraw Hill Construction, Global Insight, Moody’s economy.com, Reed Business Information, the Portland Cement Association, 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 11 years.
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