Archinect - News

Construction sector will weaken across 2024 and 2025, says AIA

2024-01-23T11:29:00-05:00

Spending on nonresidential buildings will see a minor 4% increase in 2024 despite a 20% increase in 2023, according to the AIA’s latest Consensus Construction Forecast. In 2025, meanwhile, the pace is expected to slow to just over 1% growth.

Across key sectors, manufacturing construction will see a 10% increase in 2024, while institutional construction will see mid-single-digit gains over the next two years. Spending on commercial construction is expected to be flat for the next two years.

The strong performance of manufacturing construction continues from 2023, where it accounted for almost 30% of overall spending on nonresidential buildings. Last year also saw spending on offices increase by 8%, while hotels increased by 21% and retail and other commercial facilities increased by 7%. Elsewhere, healthcare and education spending both rose by 13%.

Extract from the AIA's latest Consensus Construction Forecast. The interactive data is available to view here.

In analyzing the strong per...

Nonresidential construction spending to surge 20% by end of 2023, says AIA

2023-07-20T14:50:00-04:00

Spending on nonresidential building construction is expected to grow in late 2023 and beyond, according to the AIA’s latest Consensus Construction Forecast. The analysis projects that spending on nonresidential buildings will increase by almost 20% this year, a pace not seen since before the 2008 financial crash. The pace will however slow to 2% in 2024.

“The forecast for nonresidential construction activity remains healthy through the second half of 2023 and into 2024,” says AIA Chief Economist Kermit Baker. “The industry got off to an extremely strong start in the first half of the year, and that momentum will ensure healthy gains for the year before moving to a much more moderate pace of expansion in 2024.”

Extract from the AIA's latest Consensus Construction Forecast. The interactive data is available to view here.

According to the analysis, the heaviest increase in construction spending will be in the industrial sector, where spending will increase more than 55% over 2022 levels...

Nonresidential construction is expected to rebound through 2023 according to new AIA report

2022-02-04T14:12:00-05:00

The nonresidential building sector is expected to rebound through 2023 after a slow recovery with the broader economy last year, according to a new report from the American Institute of Architects.

The AIA’s Consensus Construction Forecast for December 2021, comprising leading economic forecasters, expects spending on nonresidential building construction to increase by 5.4 percent in 2022 and jump to a 6.1 percent increase in 2023. Last year saw a five percent decline in construction spending on buildings, with only retail and other commercial, industrial, and health care facilities managing spending increases. This year, only the hotel, religious, and public safety sectors are expected to continue to decline.

Screenshot of the AIA's latest Consensus Construction Forecast. Image: AIA

Given ongoing challenges with Covid-19 and its variants, supply chain disruptions, inflation, and labor shortages, the outlook for the nonresidential building market still looks promising going forward...

AIA expects construction to surge, but not until 2022

2021-07-29T15:56:00-04:00

Nonresidential construction in the United States is expected to healthily increase in 2022, but only after a continued decline throughout 2021, according to the AIA. In their mid-year Consensus Construction Forecast for July 2021, the organization projects that nonresidential construction spending will decline an additional 3.9% this year, following on from a 2% decline in 2020. However, 2022 will see a return to growth with a projected 4.6% increase.

For the remainder of 2021, healthcare is the only sector expected to see positive growth, with a projected increase of 1.4%. Meanwhile, the largest decline is anticipated to be hotels, declining by 19.9% this year. In 2022, however, hotels are expected to rebound strongly with an 18.9% increase in spending. The only two sectors expected to see a decline across both 2021 and 2022 are offices (5.6% decline in 2021, 0.1% decline in 2022), and religious buildings (0.9% decline in 2021, 0.9% decline in 2022).

Extract from the AIA's lates...

Non-residential construction expected to decline through at least 2021

2020-07-22T19:50:00-04:00

The American Institute of Architects (AIA) has published its latest AIA Consensus Construction Forecast Panel, a metric that collects the perspectives of "leading economic forecasters" to help project potential near-term demand for construction services.

AIA's latest report signals that the broad contraction experienced by non-residential market sectors as a result of the COVID-19 pandemic will continue through 2020 and into 2021. According to the report, "As a result of the partially shutdown economy, businesses and organizations will continue to be hesitant to invest in modernized or new facilities." The report adds, "The trend ends an almost decade-long expansion in construction spending."

Previously on Archinect: Lukewarm Architecture Billings Index persists in June.

AIA estimates that the commercial building sector will be hardest hit by the slow down, with a projected decline in construction activity of nearly 12% expected this year. The slide will continue in 2021, when constr...

Is construction activity starting to rebound?

2020-06-16T12:02:00-04:00

A second supplemental Quarterly Market Forecast (QMF) from PSMJ Resources conducted to gauge the impact of the COVID-19 pandemic on the Architecture Engineering and Construction industry offers somewhat positive news for the month of May.

After posting a steep, 27% decline in proposal activity for the month of April, the survey shows a relatively smaller decrease in May of -9%.

The survey shows that the degree of contraction within many sectors of the construction field has lessened in recent weeks, indicating that, at least for now, the month of April represents the lowest point in the most recent economic cycle.

Of particular signifiance, according to the authors of the survey, is the level of activity taking place in housing construction, which has shown a significant bounce back from the April lows.

Previously on Archinect: "Architecture Billings Index continues historic drop in April." Image courtesy of Pixabay.

The authors of the report explain: "The Housing market improved m...

Nonresidential construction to show modest growth for 2020, 2021

2020-01-27T16:39:00-05:00

According to a recently published economic report from the American Institute of Architects (AIA), the nation's nonresidential construction sector is expected to see growth of "just 1.5 percent through 2020," with a "less than a one percent increase" projected for 2021.

The report does little to either worsen or assuage long-running fears that a recession may take hold sometime during 2020, and instead offers anemic growth projections for the coming two years.

The Forecast

The prognostication comes from the so-called Consensus Construction Forecast created by AIA that combines economic forecasts for different market sectors from a panel made up of leading market entities, including Moody's, Wells Fargo, and Dodge Data & Analytics.

For the coming year, the consensus forecast envisions relatively strong growth for the education (3.9%), office (3.0%) and institutional (2.9%) segments, with the strongest growth coming from so-called "public safety" projects, which are projected to grow...

AIA Consensus Construction Forecast predicts accelerated growth through 2019

2018-01-29T14:28:00-05:00

Construction spending for nonresidential buildings is projected to increase 4 percent this year and continue at that pace of growth through 2019. While the commercial construction sectors will generate much of the expected gains this year, by 2019 the industrial and institutional sectors will dominate the projected construction growth. [...] However, in the face of a supportive economy, construction spending on nonresidential buildings disappointed last year.

The American Institute of Architects has published its latest Consensus Construction Forecast, and it's looking quite rosy. Despite labor shortages and rising material costs that continue to have an impact on the construction industry, the report — supported by the last few editions of the Institute's monthly Architecture Billings Index — projects a 4% increase for nonresidential buildings this year and a continuation of this pace through 2019.

Analyzing this economic optimism, the AIA points out five key factors:

Rebuilding and repairs from natural disasters
Tax reform implications for construction
Possibility of an infrastructure package
Strong consumer and business confidence levels
Leading economic indicators for the construction sector

For the full report and an interactive version of the infographic above, head over to aia.org.

Can these positive projections be felt in your firm or region as well? Let us know in the comment section below.

AIA's Consensus Construction Forecast downgrades expectations for 2017 and 2018

2017-07-24T15:51:00-04:00

Entering 2017, construction forecasters were quite optimistic about the near-term outlook for the industry. [...] However, as of the mid-year 2017 update, the grounds of this euphoria are evaporating. [...] key elements of the Trump administration’s legislative agenda have made almost no progress. [...] As a result, the AIA Consensus Construction Forecast panel is predicting slower growth for the construction industry for the remainder of 2017 and through 2018.

"The slower estimated growth for 2017 is expected to continue through 2018. Overall spending growth is currently projected by the Consensus Forecast panel at 3.6 percent for next year, down modestly from the 4.9 percent forecast entering this year. Commercial construction is expected to perform closest to prior expectations, with the 4.0 percent expected growth in spending for 2018 down less than 0.5 percentage points from the late-2016 forecast. Industrial construction is now likely to see very modest 1.1 percent growth next year, down from the prior expectations of 3.3 percent, while the institutional outlook has dropped from the 5.8 percent forecast of six months ago to 4.1 percent with the current projections."

For the full report and an interactive version of the infographic above, head over to aia.org.

AIA forecast indicates a great market for design job seekers in 2017

2017-01-31T13:34:00-05:00

Unemployed? Well, you shouldn't be: according to the AIA Consensus Construction Forecast, non-residential building projects are predicted to be strong throughout 2017, which means that design talent is currently in high demand. As AIA Chief Economist Kermit Baker explains in a press release, "virtually every segment of the design and construction market is reporting that recruiting and retaining qualified staff is a growing issue. Many workers left the industry during the downturn, and others left the workforce entirely, and rebuilding a competent and productive workforce is a challenge, particularly when the national unemployment rate is below five percent.” (By the way: if you want tailored advice for how to get hired at specific firms, check out Archinect's series "How To Get a Job At ___").

View full press release:

Washington, D.C. – January 31, 2017 – With construction spending continuing on an upward trajectory, 2016 can be considered a successful year for the nonresidential bui...

AIA's Consensus Construction Forecast projects continued but moderate growth in 2017

2016-07-26T12:44:00-04:00

After a strong 2015, there is a growing sense that the construction industry expansion will be more tempered over the next eighteen months. [...] 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 increase just less than six percent for 2016, with next year’s projection being an additional 5.6% gain.

“Healthy job growth, strong consumer confidence and low interest rates are several positive factors in the economy, which will allow some of the pent-up demand from the last downturn to go forward,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But at the same time, the slowing in the overall economy could extend to the construction industry a bit – with the biggest drop off expected in the industrial facility sector over the next year and a half.”

For the full report and an interactive version of the infographic above, head over to aia.org.