Nonresidential construction spending is expected to decline by 11 percent in 2009 in inflation adjusted terms, according to a new forecast by the American Institute of Architects (AIA).
The biggest declines in spending are predicted to take place in office buildings and retail establishments. On the positive side, prices have dropped for key construction commodities.
“As profits for businesses have fallen and the ability to get credit to finance projects has become far more difficult, construction plans have been put on hold or canceled outright in recent months,” says AIA Chief Economist, Kermit Baker. “This is not expected to turn around anytime soon and it’s likely to get worse before it gets better.”
Additional details from AIA's semi-annual Consensus Construction Forecast, a survey of the nation’s leading construction forecasters include:
Commercial/Industrial 2009 2010
• Hotels -20.2 percent -12.2 percent
• Retail -19.2 percent -6.6 percent
• Office buildings -17.5 percent -11.1 percent
• Industrial facilities -11.2 percent -8.4 percent
Institutional 2009 2010
• Religious -9.4 percent 1.4 percent
• Education -7.4 percent -1.9 percent
• Amusement / recreation -5.9 percent 1.0 percent
• Health care facilities -3.6 percent -1.9 percent
• Public safety -3.5 percent -1.9 percent
“The downturn in nonresidential activity has helped stabilize construction costs,” Baker says. “For example, prices for steel, gypsum products, lumber and cement have all come down recently which makes taking on projects more attractive to developers.”
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, Global Insight, Moody’s economy.com, Reed Business Information, and FMI.
The purpose of the Consensus Construction Forecast Panel is to project business condition in the construction industry over the coming 12 to 18 months. The Consensus Construction Forecast Panel has been conducted for 11 years.
